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:

Indirect Labor

Labor costs not directly tied to the production of goods or services, such as maintenance staff and supervisors.

Work in Process

Goods partially completed in manufacturing, not yet ready for sale.

Raw Materials

The basic materials from which a product is made, used in the early stages of the production process.

Work in Process

Inventory that includes materials that have been partially completed, but not yet ready for sale.