Which of the Following Statements Is Correct

question 69

Multiple Choice

Which of the following statements is correct?

• A) If a firm's volume of credit sales declines,then its DSO will also decline.
• B) If a firm changes its credit terms from 1/20,net 40 days,to 2/10,net 45 days,the impact on sales can't be determined because the increase in the discount is offset by the longer net terms which tends to reduce sales.
• C) The DSO of a firm with seasonal sales can vary because while the sales per day figure is usually based on the total annual sales,the accounts receivable balance will be high or low depending on the season.
• D) An aging schedule is used to determine what portion of customers pay cash and what portion buy on credit.
• E) Aging schedules can be constructed from the summary data provided in the firm's financial statements.

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Definitions:

Ileum

The final and longest segment of the small intestine, where most of the absorption of nutrients and minerals from food takes place.

Peptic Ulcer

A sore that develops on the lining of the stomach, small intestine, or esophagus caused by the action of stomach acid.

Antacids

Substances that neutralize stomach acid to relieve heartburn, indigestion, and stomach upset.

Antibiotics

Medicinal substances used to kill or inhibit the growth of bacteria to treat and prevent bacterial infections.