As the Accounts Receivable Turnover Ratio Decreases, the Average Collection

question 195

True/False

As the accounts receivable turnover ratio decreases, the average collection period increases.

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Definitions:

Balance Sheet Accounts

These are financial accounts that show the assets, liabilities, and owner's equity of a company at a specific point in time.

Permanent Accounts

These are ledger accounts that carry their ending balances into the next accounting period, typically including asset, liability, and equity accounts.

Temporary

In accounting, temporary refers to accounts that are closed at the end of an accounting period, such as revenues, expenses, and dividends.

Forthcoming Year

The approaching or upcoming calendar year.