During the Current Year, the Accounts Receivable Turnover Rate for Adaptive

question 74

Multiple Choice

During the current year, the accounts receivable turnover rate for Adaptive Equipment increased from 10 to 15 times per year. Which one of the following statements is the most likely explanation for the change?

• A)The company's credit department has followed up with customers whose account balances are past due in order to generate quicker collections.
• B)The company has decreased sales to its most credit worthy customers.
• C)The company has increased the amount of time customers have to pay their accounts before they are past due.
• D)The company has extended credit to more risky customers in order to increase sales.

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Definitions:

Wholesale Division

A segment of a company that deals with selling goods in large quantities at lower prices, typically to retailers or other businesses rather than direct to consumers.

Contribution Margin

The difference between a company's sales revenue and variable expenses, indicating how much revenue contributes to covering its fixed costs and generating profit.

West Segment

A geographical or operational division of a company that focuses on business activities in the western region or sector.

Break-Even Sales

The amount of revenue from sales that equals the total of the fixed and variable costs, resulting in zero profit.