To Best Interpret the Accounts Receivable Turnover Ratio, the Days

question 84

Multiple Choice

To best interpret the accounts receivable turnover ratio, the days in accounts receivable should be compared to the company's:

• A)inventory turnover.
• B)sales revenue.
• C)credit terms.
• D)accounts receivable balance.

---

Definitions:

Net Income

The net income a company earns following the subtraction of all expenses and taxes from its total revenue.

Accounting Methods

Accounting methods are the specific principles and procedures implemented by a business or organization to prepare its financial statements.

Rigid Accounting Rules

Accounting practices that are strictly defined with little to no room for interpretation or flexibility in their application.

Infrequent Event

An event or transaction that occurs rarely and is not expected to happen regularly in the normal course of business.