The Fastbank Motorcycle Company (FMC) receives a $10 million order from dealers wanting to buy its most popular model on credit. No money changes hands. Due to excess demand, FMC cannot supply the motorcycles until next quarter. How will these events affect the balance sheet? Multiple Choice Both Accounts Receivable and Shareholders' Equity will increase by $10 million this quarter. Accounts Receivable will increase by $10 million this quarter and Inventories will decrease next quarter. Both Accounts Receivable and Accounts Payable will increase by $10 million this quarter. These events will not impact the balance sheet this quarter.

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.