Accounts Receivable Turnover Will Normally Decrease as a Result Of

question 124

Multiple Choice

Accounts receivable turnover will normally decrease as a result of:

• A) the write-off of an uncollectible account against the allowance for bad debts.
• B) a significant sales volume decrease near the end of the accounting period.
• C) an increase in cash sales in proportion to credit sales.
• D) a change in credit policy to lengthen the period for cash discounts.

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Definitions:

Contribution Margin Ratio

The proportion of revenue from each dollar of sales that goes towards covering fixed expenses and creating profit.

Unit Sales

Unit sales measure the total number of individual items or products sold over a particular period.

Target Profit

The desired net income a company aims to achieve for a specific period.

Break-even

The point at which total costs and total revenues are equal, meaning that there is no net loss or gain.