All of the Following Are True of the Number of Days

question 129

Multiple Choice

All of the following are true of the number of days' sales uncollected ratio except:

• A)Is most effective in evaluating the cash sales of a company.
• B)Can be used for comparisons to other companies in the same industry.
• C)Can be used for comparisons between current and prior periods.
• D)Reflects the liquidity of receivables.
• E)Measures how much time is likely to pass before the current amount of accounts receivable is received in cash.

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Definitions:

Responsibility Report

A management tool that collects and reports planned and actual financial information by responsibility centers.

Direct Labor

Workers or employees who are directly involved in the manufacturing of products or delivery of services.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the production cost.

Equipment Depreciation

Allocation of the cost of tangible assets over their useful lives, reflecting the decrease in the value of equipment over time.