If the Turnover Period for Accounts Receivable Is 8

question 55

Multiple Choice

If the turnover period for accounts receivable is 8.1 times per annum,the average number of days it takes to collect cash from accounts receivable is:

• A) 81 days.
• B) 45 days.
• C) 295 days.
• D) 60 days.

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Definitions:

Reserve Requirement

The lowest sum of money that a bank is required to keep as reserves against the deposits it holds, as mandated by the central bank.

Federal Funds Rate

The interest rate at which banks lend reserves to each other overnight, a key tool of monetary policy used by the Federal Reserve to influence the economy.

Buying Bonds

The act of purchasing debt securities issued by governments or corporations, which pay interest over a fixed period.

Money Supply

The aggregate sum of funds present in an economy at a given moment, encompassing cash, bank deposits, and various readily accessible assets.