The Number of Days' Sales Uncollected

question 179

Multiple Choice

The number of days' sales uncollected:

• A) Is used to evaluate the liquidity of receivables.
• B) Is calculated by dividing accounts receivable by sales.
• C) Measures a company's ability to pay its bills on time.
• D) Measures a company's debt to income.
• E) Is calculated by dividing sales by accounts receivable.

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Definitions:

Overapplied Overhead

When the overhead costs allocated for manufacturing are higher than the actual overhead expenditures.

Manufacturing Overhead

All manufacturing costs excluding direct materials and direct labor, such as utilities, depreciation, and salary of supervisors.

Current Month

Refers to the ongoing or present month, in the context of financial or operational reporting.

Underapplied Overhead

A situation where the allocated manufacturing overhead costs are less than the actual overhead expenses incurred.