Why Is It a Good Business Practice to Keep Accounts

question 44

Multiple Choice

Why is it a good business practice to keep accounts receivable as low as possible?

• A) Complies with government regulations
• B) Decreases expensive paperwork
• C) Can use the money to earn interest or pay debts
• D) Provides better service to patients

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Definitions:

Return On Investment

A profitability measure that calculates the return of an investment relative to its cost.

Profit Center

A division or segment of a company that is responsible for generating its own revenue and profit.

Residual Income

The income that remains after all personal debts and expenses have been paid, or in business, after all capital costs are deducted from net revenues.

Internal Centralized Service Department

A department within an organization that provides essential services or support centrally to other departments, often aiming to increase efficiency and standardization.