Question : Where operating cycle cannot be identified, it is assumed to be of -------- months.
Option 1: 15 months
Option 2: 18 months
Option 3: 12 months
Option 4: None of the above
Answer (1)
27th Jan, 2024
Correct Answer: 12 months
Solution : Answer = 12 months
When the operating cycle cannot be clearly determined, it is typically assumed to be 12 months. This assumption aligns with the general understanding of business operations and financial reporting practices. However, in cases where the operating cycle is significantly longer or shorter, adjustments may be necessary for accurate analysis and decision-making.
Hence, the correct option is 3.
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