The Average Collection Period for Accounts Receivable Is Computed by Dividing

question 71

Multiple Choice

The average collection period for accounts receivable is computed by dividing 365 days by

• A) net credit sales.
• B) average accounts receivable.
• C) ending accounts receivable.
• D) accounts receivable turnover.

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Definitions:

Temporary Basis

A condition or status applied for a limited time period, often used in finance to describe temporary adjustments or measures.

Assets

Resources owned or controlled by a business or an individual that are expected to produce economic value or benefit in the future.

Leasing

Leasing is a financial agreement in which one party, the lessor, allows another party, the lessee, to use an asset for a specified period in exchange for periodic payments.

CCA Tax Shield

CCA Tax Shield refers to the reduction in income tax a business enjoys from being able to deduct the depreciation of tangible property over its useful life, under Canada's Capital Cost Allowance regulations.