Days Sales Outstanding (Average Collection Period or Receivables Turnover)measures

question 2

Multiple Choice

Days sales outstanding (average collection period or receivables turnover) measures

• A)the speed with which accounts payable are paid
• B)the speed with which accounts receivable are collected
• C)the safety of accounts receivable
• D)the safety of accounts payable

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Definitions:

Accounts Receivable

Debts owed by customers to a business for products or services provided but not yet compensated for.

Accounts Payable

The amount of money that a company owes to its creditors for goods or services that it has received but not yet paid for.

Marginal Tax Rate

The rate at which an additional dollar of income would be taxed, representing the individual's tax bracket.

Depreciation Life

The period over which a fixed asset is expected to depreciate until it reaches its salvage value.