Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Service Company vs. Merchandising Company

Financial Accounting

4. Merchandising Operations

Service Company vs. Merchandising Company

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Multiple Choice

Which of the following statements regarding the operating cycle of a merchandising company is FALSE?

A merchandising company's operating cycle includes the purchase of inventory and its eventual sale to customers.

The operating cycle of a merchandising company is generally longer than that of a service company.

The operating cycle begins with the purchase of inventory and ends with the collection of cash from customers.

The operating cycle of a merchandising company does not involve the collection of cash from customers.

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Verified step by step guidance

Step 1: Understand the concept of the operating cycle in a merchandising company. The operating cycle refers to the process a company goes through to purchase inventory, sell it to customers, and collect cash from those sales.

Step 2: Analyze the first statement: 'A merchandising company's operating cycle includes the purchase of inventory and its eventual sale to customers.' This is true because purchasing inventory and selling it are integral parts of the operating cycle.

Step 3: Analyze the second statement: 'The operating cycle of a merchandising company is generally longer than that of a service company.' This is true because service companies do not deal with inventory, which adds time to the operating cycle for merchandising companies.

Step 4: Analyze the third statement: 'The operating cycle begins with the purchase of inventory and ends with the collection of cash from customers.' This is true because the cycle is completed only when cash is collected from customers after the sale.

Step 5: Analyze the fourth statement: 'The operating cycle of a merchandising company does not involve the collection of cash from customers.' This is false because collecting cash from customers is a critical part of completing the operating cycle.