The Average Collection Period Is Frequently Used to Assess the Effectiveness

question 184

True/False

The average collection period is frequently used to assess the effectiveness of a company's credit and collection policies.

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Definitions:

Cost Center

A department or function within a business to which costs are charged for accounting purposes, but does not directly generate revenue.

Investment Center

A business unit or segment within an organization that is responsible for its own revenues, expenses, and investments in assets.

Gross Profit

The difference between revenue and the cost of goods sold, indicating the efficiency of a company in managing its labor and supplies in the production process.

Income Statement

A financial statement that shows a company's revenues, expenses, and profits over a specific period of time.