Accounts Receivable Turnover Will Normally Decrease as a Result Of

question 124

Multiple Choice

Accounts receivable turnover will normally decrease as a result of:

• A) the write-off of an uncollectible account against the allowance for bad debts.
• B) a significant sales volume decrease near the end of the accounting period.
• C) an increase in cash sales in proportion to credit sales.
• D) a change in credit policy to lengthen the period for cash discounts.

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Definitions:

Residual Income

Residual income is the amount of net income generated in excess of the minimum rate of return. It's often used to assess the performance of business units.

Invested Assets

Resources or funds that have been allocated for investment purposes in various types of assets, such as stocks, bonds, or real estate, aiming for potential returns.

Investment Turnover

A measure of a company's efficiency in using its investments to generate sales, usually calculated as sales divided by average invested assets.

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.