A Company That Has Days' Sales Uncollected of 30 Days

question 211

True/False

A company that has days' sales uncollected of 30 days and days' sales in inventory of 18 days implies that inventory will be converted to cash in about 12 days.

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Definitions:

Cash Receipt

A document or electronic record acknowledging the receipt of cash from a transaction.

Voucher System

A control mechanism in accounting where vouchers are prepared as evidence for every transaction or payment.

Supporting Documents

Paperwork or electronic files that provide evidence or back up for transactions recorded in an accounting system.

Electronic Funds Transfers

Digital transfers of money from one bank account to another either within the same financial institution or across different institutions.