The ________ Is Calculated by Dividing Accounts Receivable by Average

question 13

Multiple Choice

The ________ is calculated by dividing accounts receivable by average daily sales.

• A) current ratio
• B) average collection period
• C) debt ratio
• D) return on investment

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Definitions:

Sales on Account

Transactions where goods or services are sold and payment is deferred, leading to the creation of accounts receivable on the balance sheet.

Merchandise

Goods that are purchased, stored, and sold by a business in its regular operations, often referred to as inventory.

Cash Collections

The process of receiving payment from customers for goods or services provided, impacting the company's cash flow positively.

Manufacturing Costs

Expenses directly incurred in the production of goods, including raw materials, labor, and overhead costs.