Which of the Following Measures the Average Days of Sales

question 22

Multiple Choice

Which of the following measures the average days of sales committed to the extension of trade credit?

• A)sale-to-cash conversion period
• B)inventory-to-sale conversion period
• C)purchase-to-payment conversion period
• D)cash conversion cycle period

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Definitions:

Accrued Revenues

Revenues that have been earned by providing goods or services but have not yet been received or recorded in the accounting records.

Unearned Revenues

Money received by a company for services or products yet to be delivered or performed, considered a liability until the service or product is delivered.

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the company's books.

Prepaid Expenses

Expenses paid in advance and recorded as assets until they are actually used or consumed.