The Days' Sales Uncollected Ratio Is Used To

question 330

Multiple Choice

The days' sales uncollected ratio is used to:

• A) Measure how many days of sales remain until the end of the year.
• B) Determine the number of days that have passed without collecting on accounts receivable.
• C) Identify the likelihood of collecting sales on account.
• D) Measure the amount of layaway sales for a period.
• E) Estimate how much time is likely to pass before cash receipts from credit sales equal the amount of the existing accounts receivablE.

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Definitions:

Interest-Bearing Note

A debt instrument that pays interest to the holder at a fixed or variable rate until its maturity.

Bond

A fixed-income investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period at a variable or fixed interest rate.

Straight-Line Method

A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.