If a Firm Takes Actions That Reduce Its Days Sales

question 116

True/False

If a firm takes actions that reduce its days sales outstanding (DSO), then, other things held constant, this will lengthen its cash conversion cycle (CCC).

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Definitions:

Accounts Receivable

Outstanding payments that clients are obligated to pay a company for received goods or services.

Various Accounts

Different types of accounts managed within accounting, including assets, liabilities, equity, expenses, and revenue accounts.

Petty Cash Fund

A petty cash fund is a small amount of cash on hand used for paying expenses too small to merit writing a check.

Cash Short

A situation where the actual cash on hand is less than the expected amount, usually identified during cash reconciliation.