Which Statement Best Describes DSO and Aging

question 38

Multiple Choice

Which statement best describes DSO and aging?

• A)If a firm's volume of credit sales declines, then its DSO must also decline.
• B)If a firm changes its credit terms from 1/20, net 40, to 2/10, net 60, the impact on sales can't be determined because the increase in the discount is offset by the longer net terms, which tends to reduce sales.
• C)The DSO of a firm with seasonal sales can vary. While the sales per day calculation is usually based on the total annual sales, the accounts receivable balance will be high or low depending on the season.
• D)An aging schedule is used to determine what portion of customers pay cash and what portion buy on credit.

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Definitions:

Swerve

A sudden change in direction or position, typically used to avoid collision or an obstacle.

Drive Straight

a directive or action where one proceeds forward without turning, often used in navigation or driving instructions.

Nash Equilibrium

A concept within game theory where each player's strategy is optimal, given the strategies of all other players, leading to a situation where no player has anything to gain by changing only their own strategy.

Press Button

A phrase that generally refers to initiating an action or process with a simple gesture, such as pressing a button.