If the Accounts Receivable Balance on a Firm's Balance Sheet

question 53

Multiple Choice

If the accounts receivable balance on a firm's balance sheet decreases without any change in credit sales,the operating cycle will

• A)increase due to the increased receivables turnover rate.
• B)decrease because the number of days' sales in receivables will decrease.
• C)remain constant because credit sales are constant.
• D)remain constant because the accounts receivable and inventory periods will be constant.
• E)remain constant because cash collections affect the cash cycle,not the operating cycle.

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Definitions:

Mixed Cost

A cost that contains both fixed and variable components and changes with the level of output but not directly in proportion.

Fixed Cost Element

A component of total costs that does not change with the level of output or activity within a certain range.

Fixed Cost

Costs that do not change with the level of manufacturing activity or output, such as rent, salaries, and insurance premiums.

Constant In Total

A term that refers to a cost or expense that remains unchanged in total, regardless of changes in the related level of activity or volume.