A Company's Effectiveness Regarding Its Collection Efforts Can Be Measured

question 17

Multiple Choice

A company's effectiveness regarding its collection efforts can be measured by using the

• A)working capital ratio.
• B)acid test ratio.
• C)accounts payable turnover.
• D)accounts receivable turnover.

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Definitions:

Periodic Inventory System

A method of inventory management where inventory levels and cost of goods sold are updated in the accounting records on a periodic basis, such as monthly or annually.

FIFO Cost Method

An inventory valuation method that assumes goods are sold in the order they were acquired, using the costs of the earliest items first.

Ending Inventory

This is the total value of all inventory still available for sale at the end of an accounting period.

Periodic Inventory System

An inventory accounting method where inventory levels and cost of goods sold are determined at the end of an accounting period.