If a Company Is Having Difficulty Collecting Their Accounts Receivable

question 48

Multiple Choice

If a company is having difficulty collecting their accounts receivable, which of the following statements would be true?

• A)Their accounts receivable turnover ratio would be increasing.
• B)Their average collection period would be increasing.
• C)Their current ratio would be decreasing.
• D)Their quick ratio would be decreasing.

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Definitions:

No-Name Brand

Products that are sold without a brand name, often at a lower price compared to branded products.

Producer Surplus

The difference between the amount that producers are willing and able to sell a product for and the actual amount they do sell it for.

Consumers Surplus

The gap between the aggregate sum consumers are ready and capable of paying for a good or service versus what they actually shell out.

Elastic Demand

A market condition where the quantity demanded of a good or service significantly changes in response to a change in price.