If the Average Accounts Receivable That a Firm Holds Decreases

question 45

Multiple Choice

If the average accounts receivable that a firm holds decreases without any decrease in credit sales, the operating cycle will:

• A) stay the same because of no sales change.
• B) stay the same because cash collections are sooner and it will affect the cash cycle only.
• C) decreases because days sales outstanding decreases.
• D) stay the same because accounts receivable are not in the operating cycle.

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Definitions:

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price over a specific period.

Income Effect

The change in an individual's or economy's consumption resulting from a change in real income.

Price of Hamburgers

The price of hamburgers refers to the cost at which hamburgers are sold, influenced by factors such as production costs, demand, and market competition.

Hamburger Restaurant

is a specific type of dining establishment that specializes in the preparation and sale of hamburgers alongside various accompaniments.