On January 1,2011,Company Z Had Accounts Receivable of $5,000

question 104

Multiple Choice

On January 1,2011,Company Z had accounts receivable of $5,000.During the year,Company Z sold $100,000 of merchandise to credit customers.At December 31,2011,Company Z had accounts receivable of $4,000.How much cash did the company collect from credit customers during the year?

• A)$105,000
• B)$101,000
• C)$99,000
• D)$95,000

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Definitions:

Operating Leverage

Operating leverage describes the extent to which a company can increase its profits by increasing sales, highlighting the ratio of fixed costs to variable costs.

Net Operating Income

The amount of profit a company makes from its normal business operations, excluding any income or costs from investments and other non-core business activities.

Sales Volume

The quantity of goods or services sold by a company within a specific period, used to measure business performance.

High-Low Method

An accounting technique used to estimate fixed and variable costs based on the highest and lowest levels of activity or cost.