An Increase in the Average Collection Period May Suggest All

question 83

Multiple Choice

An increase in the average collection period may suggest all of the following EXCEPT ____.

• A) the company caters to slow-paying customers
• B) customers are not paying their bills on time
• C) sales have decreased
• D) an overly liberal credit policy

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Definitions:

Support Department

An organizational unit that provides essential services, such as human resources or IT support, but does not directly contribute to the production of goods or services.

Direct Costs

Costs that are identified with and traced to a cost object.

Wages and Salaries

Payments made to employees for their labor or services, typically based on hours worked (wages) or a set rate per period (salaries).

Machine Maintenance

The process of routine check-ups and repairs on machinery to ensure it is functioning correctly and to prevent future breakdowns.