Which of the Following Measures the Number of Days That

question 56

Multiple Choice

Which of the following measures the number of days that the firm holds accounts payable before it has to extend cash to buy raw materials?

• A)Accounts receivable turnover
• B)Average collection period
• C)Average payment period
• D)Accounts payable turnover

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Definitions:

Budgeting

The process of creating a plan to spend your money over a specified period, outlining projected income and expenses.

Cash Budget

A financial plan that estimates cash inflows and outflows over a specified period, helping manage cash flow and liquidity.

Capital Expenditures Budget

A budget that outlines planned investments in long-term assets and projects, emphasizing spending on acquiring or upgrading physical assets.

Assurance of Future Profits

A form of guarantee or promise that endeavors to ensure or secure profit generation in future business activities.