During 2017, Jerico's Sales Increased by 20

question 89

Multiple Choice

During 2017, Jerico's sales increased by 20%. If accounts receivable increased by 40%, this may indicate that

• A) the company's collections have improved.
• B) the company may be increasing sales by loosening its credit policies.
• C) the company's collection policies have become more aggressive.
• D) the company's management is focusing on cash sales.

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Definitions:

Unit Costs Decreasing

A situation indicating that the expense incurred to produce a single unit of output is declining, often due to efficiencies or increased production scale.

Lowest Gross Profit

The smallest amount of profit generated from selling goods or services, calculated by subtracting the cost of goods sold from sales revenue.

Raw Materials

Basic substances in their natural, modified, or unprocessed states used in the production or manufacturing of goods.

Operating Expense

The costs associated with the day-to-day operations of a business, excluding the costs of goods sold.