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:

Cell Theory

Theory that all organisms consist of one or more cells, which are the basic unit of life; all cells arise by division of preexisting cells; and all cells pass hereditary material to offspring.

Multicellular Organism

An organism composed of multiple cells that are specialized to perform distinct functions, contributing to the overall functionality and survival of the organism.

Glucagon

Pancreatic hormone that encourages glycogen breakdown; increases blood glucose level.

Receptor Proteins

Proteins located on the surface or inside of cells that bind to specific molecules like hormones or neurotransmitters, triggering a specific cellular response.