Companies a and B Both Report Net Income Growth of 12

question 63

Multiple Choice

Companies A and B both report net income growth of 12% per year.Company A has a receivables turnover ratio of 5.6,which is smaller than its previous year.Company B has a receivables turnover ratio of 11.3,which is higher than its previous year.All other things being equal:

• A)Company A appears to be better managed.
• B)Company A will have the lower days-to-collect measure.
• C)Company B appears to be better managed.
• D)Company B's days-to-collect measure is rising.

---

Definitions:

Transactions

Transactions refer to the exchange of goods, services, or financial assets in business activities.

Journal Entries

The method of recording financial transactions in an accounting system, where each transaction is entered twice to maintain the balance of the accounting equation.

Transactions

The events or interactions between businesses or individuals that have economic substance and can be measured in terms of money.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal, used to ensure the accounting entries are in balance.