Average collection period measures * the average time taken by debtors to make payment on credit sales time allowed to debtors to make payment on credit sales delay in payment by debtors O number of customers opting for credit sales

Average collection period measures * the average time taken by debtors to make payment on credit sales time allowed to debtors to make payment on credit sales delay in payment by debtors O number of customers opting for credit sales

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 9E

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Average collection period measures
the average time taken by debtors to make payment on credit sales
time allowed to debtors to make payment on credit sales
delay in payment by debtors
number of customers opting for credit sales

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Question The average collection period is the average amount of time that elapses from a credit sale until the company can use the payment (collection) of the sale. True or false?
When a company earns interest on a note receivable or on a bank account, the debit and credit are as follows: Group of answer choices Debit Interest revenue, credit Accounts receivable Debit Interest revenue, credit Interest receivable Debit Accounts receivable, credit Interest revenue Debit Interest receivable, credit Interest revenue
The __________ method is based on the relationship of credit sales and matches current bad debt expense against current credit sales. a.direct write-off b.percent of outstanding accounts receivable c.percentage of credit sales d.aging of accounts receivable
How do each of the items in a firm’s credit policy—defined to include the credit period, the discountand discount period, the credit standards used,and the collection policy—affect its sales, the levelof its accounts receivable, and its profitability?
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Which of the following statements is correct about credit period? A. If a customer purchases goods within the credit period, a cash discount will be allowed to the customer B. If a customer settles the payment within the credit period, a cash discount will be allowed to the customer C. It refers to the period in which customers must settle their debts due D. It refers to the period in which customers need to settle one-third of the debts in order to avoid further interests charged
Which of the following best describes the objective of estimating bad debt expense with the percentage of credit sales method? a.To estimate the amount of bad debt expense based on an aging of accounts receivable. b.To estimate bad debt expense based on a percentage of credit sales made during the period. c.To determine the amount of uncollectible accounts during a given period. d.To facilitate the use of the direct write-off method.
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The trade and other receivables note will include the following items? A. Debtors control + allowance for credit losses - prepaid expenses B. None of the above C. Debtors control - allowance for credit losses - accrued expenses D. Debtors control - allowance for credit losses + prepaid expenses E. Debtors control + allowance for credit losses + prepaid expenses
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How does the cost of costly trade credit generally compare withthe cost of short-term bank loans?