A General Rule to Use in Assessing the Average Collection

question 59

Multiple Choice

A general rule to use in assessing the average collection period is that it

• A) should not exceed 30 days.
• B) can be any length as long as the customer continues to buy merchandise.
• C) should not greatly exceed the return period.
• D) should not greatly exceed the credit term period.

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Definitions:

Price

The charge in currency projected, demanded, or provided in recompense for something.

Purchased Amount

The total volume or quantity of goods or services bought.

Normal Good

A good whose demand increases as consumers' income rises, holding all other factors constant.

Consumption

Consumption refers to the use of goods and services by households. It is a primary component of the economy, encompassing the spending on goods and services by consumers.