Which of the Following Transactions Does Not Affect Cash During

question 128

Multiple Choice

Which of the following transactions does not affect cash during a period?

• A) Write-off of an uncollectible account
• B) Collection of an accounts receivable
• C) Sale of common shares
• D) Redemption of bonds

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Definitions:

Accounts Receivable Period

The accounts receivable period is the average number of days it takes for a company to collect payments owed by its customers after a sale has been made.

Expected Sales

The projected amount of sales that a company anticipates to achieve within a specific period.

Average Collection Period

The average number of days it takes a company to receive payment after a sale has been made.

Operating Cycle

The period between the acquisition of inventory and the collection of receivable generated from sales, reflecting how long it takes for a business to convert its inventory into cash.