What does operating cycle mean on the CPA exam?
Operating cycle. How long it takes to turn cash into inventory, inventory into a receivable, and the receivable back into cash. It defines what counts as current.
Defined against ASC 210-10-45-3.
Which CPA exam sections use operating cycle?
Operating cycle appears in the FAR section of the CPA exam.
Other terms defined against ASC 210-10
- balance sheet: A snapshot at one date of what the entity owns, what it owes, and the owners' residual.
Related terms
- days sales outstanding: How long on average it takes to collect a receivable, measured as receivables divided by credit sales per day.