If Accounts Receivable Stays the Same,and Credit Sales Go Up

question 102

Multiple Choice

If accounts receivable stays the same,and credit sales go up:

• A) the average collection period will go up.
• B) the average collection period will go down.
• C) accounts receivable turnover will decrease.
• D) no changes will occur.

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Definitions:

Subsidiary Ledger

A detailed ledger that contains the individual accounts needed to support a major ledger account, such as accounts receivable, where individual customer accounts are detailed.

Control Account

An account used in the general ledger to summarize and keep track of transactions relating to a specific aspect of a company's finances, such as accounts receivable or payable.

General Ledger

A comprehensive record of all financial transactions within an organization, serving as the foundation for a company's financial statements.

Cash Payments Journal

A financial journal that records all cash outflows or payments made by a business, including expenses, debt payments, and purchases.