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    Impact on the Cash and Operating Cycles

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    Walk me through how to solve this problem:
    indicate the impact on the cash and operating cycles, respectively, using I = increase, D = decrease, or N = no change:

    A. the terms of cash discounts offered to customers are made more favorable.
    B. the cash discounts offered by suppliers are increased and payments are made earlier
    C. an increased number of customers begin to pay in cash instead of with credit
    D. fewer raw materials than usual are purchased
    E. a greater percentage of raw material purchases are paid for with credit
    F. more finished goods are produced for inventory instead of for order

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    A) D, this decreases the time before cash is received
    B) I, this lowers the credit terms and cash must be used ...

    Solution Summary

    This solution discusses the impact on the cash and operating cycles