Which of the Following Situations Should Provide Managers with the Most

question 30

Multiple Choice

Which of the following situations should provide managers with the most comfort if accounts receivable balances are increasing each quarter?

• A) The sales level has decreased.
• B) The sales level has increased.
• C) The rate of collections has decreased.
• D) The rate of collections has increased.

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Definitions:

After-Tax Discount

The reduced value of a cash flow or series of cash flows after accounting for the impact of income tax.

Straight-Line Depreciation

is a method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Incremental Sales

The additional revenue generated from a specific business action or decision.

Cash Operating Expenses

Expenditures that a company makes in cash for the day-to-day running of its business.