B) Days in accounts receivable is an indicator to identify trends in payer reimbursement history.
Added by Dylan H.
Step 1
This metric measures the average number of days it takes for a company to collect payment after a sale has been made. A lower number indicates quicker collections, while a higher number suggests potential issues in the collection process. Show more…
Show all steps
Your feedback will help us improve your experience
James Kiss and 73 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
During the current year, the accounts receivable balance increased. a. This indicates that credit sales exceeded collections on account during the period. b. This indicates that there were no cash sales during the period. c. This increase is added to credit sales to determine the collections on account during the period. d. This increase is added to net income in the operating activities section of a statement of cash flows prepared under the indirect method.
James K.
Question 2: Which of the following measures the number of days accounts receivable are held before the firm collects cash from the sale? A) accounts receivable turnover b) average collection period C) average payment period D) accounts payable turnover
Adi S.
Bravo Inc. offers sales terms of 30 days, but as sales have grown, collection of accounts receivable has gone from an average of 28 days to 38 days. To address this, two new collections staff have been employed, doubling the collection team. As a result, the business is projecting that receivables will be collected on an average of 36 days next year. What is your assessment of this assumption? a) This assumption is plausible. b) This assumption is overly conservative. c) This assumption is too aggressive.
Breanna O.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD