The Number of Days' Sales Uncollected

question 28

Multiple Choice

The number of days' sales uncollected

• A)Measures a company's ability to pay its bills on time
• B)Is calculated by dividing accounts receivable by sales
• C)Is used to evaluate the liquidity of receivables
• D)Measures a company's debt to income
• E)Is calculated by dividing sales by accounts receivable

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Definitions:

Absorption Costing

A method of accounting that encompasses the total manufacturing expenses, including direct materials, direct labor, along with both variable and fixed overhead costs, as part of a product's cost.

Net Operating Income

Earnings before interest and taxes (EBIT), measuring a company's profitability from its operations.

Variable Costing

A costing method that includes only variable production costs in product costs, treating fixed costs as period expenses.

Absorption Costing

An accounting method that includes all manufacturing costs, both fixed and variable, in the cost of a product.