Which Statement About Accounts Receivable Is Correct

question 44

Multiple Choice

Which statement about accounts receivable is correct?

• A)If a security analyst saw that a firm's DSO was higher than the industry average and was increasing and trending still higher, this would be interpreted as a sign of strength.
• B)If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its DSO will increase.
• C)There is no relationship between the DSO and the ACP. These ratios measure entirely different things.
• D)If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales outstanding will decline.

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Definitions:

Omission

The act of leaving out or excluding something, either intentionally or accidentally.

Conflicts

Disagreements or disputes between parties, typically arising from differing interests or opinions.

Competitive

Characterized by rivalry, where individuals or groups vie to outperform each other to achieve a goal.

Act Utilitarianism

A ethical theory that posits the rightness or wrongness of an action is determined solely by its contribution to overall utility, measured by the amount of happiness or unhappiness it produces.