Question : Which of the following statements is not true, with respect to operating cycles?
Option 1: Operating cycle cannot be identified, it is assumed to be of 13 months.
Option 2: Operating Cycle means the time taken by a company to acquire an asset for processing and Converting it into Cash and Cash Equivalents.
Option 3: Operating Cycle is determined for each class of business separately.
Option 4: All of the above
Correct Answer: Operating cycle cannot be identified, it is assumed to be of 13 months.
Solution : Answer = The Operating cycle cannot be identified; it is assumed to be of 13 months.
The statement "Operating cycle cannot be identified; it is assumed to be 13 months" is not true. Operating cycles can vary significantly between different businesses and industries, and they are typically determined based on the specific operations and characteristics of each business rather than being universally assumed to be a fixed duration, like 13 months.
Hence, the correct option is 1.
