Sales Cycle Principle in Accounting Quiz

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Questions and Answers

What is the principle of the sale cycle in accounting?

Recognition of revenue and expenses when they occur, not when cash is received or paid (correct)
Recognition of revenue and expenses only when cash is received or paid
Recognition of revenue and expenses based on when the invoice is issued
Recognition of revenue and expenses based on when the product is delivered

What is the impact of the sale cycle principle on financial statements?

It delays the recognition of revenue and expenses
It accelerates the recognition of revenue and expenses
It has no impact on financial statements
It ensures that financial statements accurately reflect the financial performance of a company (correct)

What does the cash cycle principle in accounting focus on?

Managing the time between paying suppliers and receiving cash from customers (correct)
Calculating the net present value of future cash flows
Minimizing operating expenses to increase profit margin
Maximizing shareholder wealth through investment decisions

How does the sale cycle principle affect cash flow?

It may result in differences between the timing of recognizing revenue and expenses and the actual cash inflows and outflows (D) Signup and view all the answers