If Accounts Receivable Stays the Same, and Credit Sales Go

question 92

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) the average collection period will go down and accounts receivable turnover will decrease.

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Definitions:

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and manufacturing overhead.

Equivalent Units

A concept in cost accounting that is used to allocate costs to partially completed goods, measured in the amount of finished goods units.

Conversion Costs

The combined costs of direct labor and overhead expenses incurred to convert raw materials into finished goods.

Materials

The raw substances or components that a company uses in the production of goods or delivery of services.