The Average Collection Period Measures The

question 210

Multiple Choice

The average collection period measures the:

• A)number of days from the time a typical credit sale is made until payment is received.
• B)number of days it takes a typical check to "clear" through the banking system.
• C)number of days beyond the end of the credit period before a typical customer payment is received.
• D)number of days before a typical account becomes delinquent.

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Definitions:

Owner's Equity

The remaining value of a company's assets after all liabilities have been subtracted, indicating the stake of ownership in the enterprise.

Assets

Economic resources or owned valuables that are expected to provide future benefits to a business.

Liabilities

Economic obligations or debts that an entity is required to pay to another party.

Owner's Equity

The net assets belonging to shareholders or owners of an entity after liabilities are accounted for, denoting their ownership claim.