A Firm Ended the Year with an Average Collection Period

question 118

Multiple Choice

A firm ended the year with an average collection period of 50 days. The firm's credit sales were $11 million. What is the firm's year-end balance in accounts receivable?

• A) $1.27 million
• B) $0.85 million
• C) $1.51 million
• D) $2.05 million

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Definitions:

Federal Law

Laws created and enforced by the federal government of a country, as opposed to state, local, or international laws.

Grace Period

A set length of time after a due date during which a payment can be made without penalty.

Advanced Notice

A notification given in advance to inform of future events or actions.

Insurance Company

An entity that provides financial protection and compensation for losses to individuals and entities under the terms of an insurance contract.