He average collection period is computed by dividing

A) net credit sales by ending gross accounts receivable.

B) 365 days by the accounts receivable turnover.

C) net credit sales by average gross accounts receivable.

D) the accounts receivable turnover by 365 days.

Question

Business

Hayden Castro

1 April, 15:08

He average collection period is computed by dividing

A) net credit sales by ending gross accounts receivable.

B) 365 days by the accounts receivable turnover.

C) net credit sales by average gross accounts receivable.

D) the accounts receivable turnover by 365 days.

+3

Answers (1)

Know the Answer?

Esteban Marshall · Answer 1

B). 365 days by the accounts receivable turnover.

Explanation:

This is said to be the time it takes for a business to receive money owed by its client in its amount receivable (AR).

The average collection period formula is the number of days in a period divided by the receivables turnover ratio. The numerator of the average collection period formula shown at the top of the page is 365 days. For many situations, an annual review of the average collection period is considered.

He average collection period is computed by dividingA) net credit sales by ending gross accounts receivable.B) 365 days by the accounts receivable turnover.C) net credit sales by average gross accounts receivable.D) the accounts receivable turnover by 365 days.

He average collection period is computed by dividing

A) net credit sales by ending gross accounts receivable.

B) 365 days by the accounts receivable turnover.

C) net credit sales by average gross accounts receivable.

D) the accounts receivable turnover by 365 days.