Which of the Following Reasons Is NOT Considered Acceptable When

question 19

Multiple Choice

Which of the following reasons is NOT considered acceptable when examining the decrease in accounts receivable on the cash flow statement?

• A) More customers have failed to pay off their accounts compared to prior year.
• B) The company hired an employee dedicated to monitoring accounts receivable.
• C) The company is collecting its accounting receivable faster.
• D) Sales revenue decreased.

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Definitions:

Processing Department

A division within a manufacturing operation where a specific type of processing or assembly is completed.

Equivalent Units

A measure used in process costing that converts partially completed units into a smaller number of fully completed units.

First-in

Typically refers to the "First-In, First-Out" (FIFO) inventory method where the oldest inventory items are recorded as sold first.

Conversion Costs

The costs required to convert raw materials into finished goods, including direct labor and manufacturing overhead.