A Company Has an Average Collection Period of 52 Days

question 50

Multiple Choice

A company has an average collection period of 52 days and accounts receivables of $250,000.What are the company's annual sales?

• A) $2,234,756
• B) $1,754,808
• C) $1,543,823
• D) $250,000

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Definitions:

Retained Earnings

The cumulative net income that has been retained by a company for reinvestment in its operations or to pay debt, not distributed to stockholders as dividends.

Depreciation Expense

The allocation of the cost of a tangible asset over its expected useful life to account for the loss of value over time.

Cash Dividends

A portion of a company's earnings distributed to shareholders in the form of cash.

Treasury Stock

Represents the portion of shares that a company keeps in its own treasury. These shares can be repurchased from the market and do not confer ownership rights.