The Accounts Receivables Turnover Ratio Is Computed by Dividing Total

question 25

True/False

The accounts receivables turnover ratio is computed by dividing total gross sales by the average net receivables during the year.

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Definitions:

Sales On Account

Transactions where goods are sold and delivered, but payment is delayed according to agreed terms instead of being made at the time of sale.

Cost Of Goods Sold

Direct costs associated with the assembly of products a company offers for sale, including labor and materials.

Operating Cycle

The duration it takes for a company to purchase inventory, sell products, and collect the cash from sales, measuring the efficiency of a business's cash flow.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.