a
Concept Introduction:
The accounts receivable turnover.
b
Concept Introduction: Accounts receivable turnover is a measure of efficiency because the longer the receivables are outstanding likelihood of collection would be lower. Accounts receivable turnover ascertains how quickly a company has converted its receivable into cash. Higher accounts receivable turnover indicates company collects receivables quickly and the credit policies are very strong.
The comparison of R Company’s receivable turnover with competitor’s receivable turnover of 7.5 times.
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FUNDAMENTAL ACCOUNTING PRINCIPLES
- Which of the following can have a VERY high amount of accounts receivable & long receivables collection period? O Bank O Retail B2B (Business to business) Retail B2C (Business to customer) O Utility companyarrow_forwardRetail B2C Retail B2B (buisness to business) which of the following is likely to have a higher amount of accounts recievable and a longer receivables collection period?arrow_forwardReview the select information for Bean Superstore and Legumes Plus (industry competitors), and then complete the following. A. Compute the accounts receivable turnover ratios for each company for 2018 and 2019. B. Compute the number of days sales in receivables ratios for each company for 2018 and 2019. C. Determine which company is the better investment and why. Round answers to two decimal places.arrow_forward
- Multiple choice: 1. Your business sells goods to a credit customer. Which of the following accounts is increased? A. Accounts Receivable B. Cost of sales C. Salea D. All of these 2. The business renders services to clients. A. Sales B. Service fees C. Interest income D. Gainarrow_forwardWhat should be the formula in Accounts Receivable Turnover? 1 2 Sales 3 Cost of Goods Sold 4 EBIT 5 Cash 6 Accounts Receivable 7 Inventory 8 Net Fixed Assets 9 Accounts Receivable Turnover =B5/B2 =B6/B3 None of the above =B2/B6 =B6/B2 2017 4,500,000 2,875,000 962,500 48,250 492,150 513,750 1,148,360arrow_forwardUse the following to answer questions 16 - 19 For each transaction indicate whether it should: A. increase, B. decrease, or C. no effect. Credit sales transaction cycle Asskiabilitstockholders’ equRtøvenespenses 16. Provide services on account 17. Estimate uncollectible accounts 18. Write off accounts as uncollectible 19. Collect on account previously written offarrow_forward
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- Please answer following question Q5: Company Name Net Credit Sales Beginning Net Receivables Ending Net Receivables Brown $180,000 $ 5,000 $30,000 Pink $400,000 $52,000 $42,000 Yellow $ 75,000 $ 5,400 $ 5,800 (a)Which company is doing the best job of managing its accounts receivable? Why? Be sure to support your answer with computations. (b)What are your concerns about these companies? BR,arrow_forwardQUESTION 2 If a company sells its accounts receivables to a factor O a. there is a gain on the sale of the receivables. O b. the seller of the A/R pays a fee to the factor. O c. the factor pays a fee to the seller of the A/R. O d. the seller defers recognition of sales revenue until the account is collected by the factor.arrow_forwardReview the select information for Liquor Plaza and Beer Buddies (industry competitors) and complete the following. A. Compute the accounts receivable turnover ratios for each company for 2018 and 2019. B. Compute the number of days sales in receivables ratios for each company for 2018 and 2019. C. Determine which company is the better investment and why. Round answers to two decimal places.arrow_forward
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