Calculate the Accounts Receivable Period for a Firm with an Annual

question 97

Multiple Choice

Calculate the accounts receivable period for a firm with an annual sales of $10 million and average accounts receivable of $2 million.

• A) 18.25 days
• B) 20.00 days
• C) 51.00 days
• D) 73.00 days

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Definitions:

Cost of Goods Sold

Cost of Goods Sold (COGS) indicates the direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Sales

The total income a company generates from selling goods or services before any expenses are subtracted.

Cost of Goods Sold

An expense measure that reflects the cost of the materials and labor directly tied to the production of goods sold by a company.

Inventory Purchases

The total amount of goods a company buys for the purpose of reselling them during a particular period, often used to replenish stock levels.