The Days-To-Collect Measure Indicates

question 59

Multiple Choice

The days-to-collect measure indicates:

• A)the number of days an average selling and collecting cycle takes.
• B)the average number of times the firm completes the selling and collecting cycle during the year.
• C)the average number of days for a customer's payment to clear the banking system.
• D)the average number of days before the company receives a customer's payment and uses the cash to re-order merchandise.

Grasp the concept of the perpetual inventory method and its application in accounting for merchandise.

Understand the function and maintenance of the accounts payable subsidiary ledger.

Comprehend the relationship and reconciliation between the accounts payable controlling account and the accounts payable subsidiary ledger.

Develop skills in preparing general journal entries for merchandise purchases, including those with freight costs and returns.

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Definitions:

Dividends Declared

Profits distributed by a company to its shareholders, usually determined by the company's board of directors.

Statement of Retained Earnings

A financial document showing how a company's retained earnings have changed over a period due to dividends and earnings.

Expense Account

An expense account refers to a ledger account that tracks money spent or costs incurred in a business's operational activities.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is retained by the company to be reinvested in its core business or to pay debt.