Table 15.6 A Breakdown of Teffan, Inc.'s Outstanding Accounts Receivable Dated June

question 301

Multiple Choice

Table 15.6
A breakdown of Teffan, Inc.'s outstanding accounts receivable dated June 30, 2014 on the basis of the month in which the credit sale was initially made follows. The firm extends 30-day credit terms.
-An increase in accounts receivable turnover for a firm due to an increase in collection efforts will ________.

• A) decrease the firm's marginal investments in accounts receivable
• B) increase the firm's marginal investments in accounts receivable
• C) decrease the firm's collection expense
• D) increase the firm's bad debt expense

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Definitions:

Payroll Taxes

Taxes imposed on employers and employees, calculated as a percentage of the salaries that employers pay their staff.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxation by the government.

Marginal Tax Rate

The rate at which the last dollar of income is taxed, reflecting the percentage of an additional dollar of income that is paid in taxes.

Total Tax

The cumulative amount of taxes paid by an individual or business across all applicable tax categories within a specific period.