Which of the Following Is a Sign That a Company

question 114

Multiple Choice

Which of the following is a sign that a company cannot quickly turn its receivables into cash?

• A)A high receivables turnover ratio.
• B)A low receivables turnover ratio.
• C)A low average collection period.
• D)Both a high receivables turnover ratio and a low average collection period.

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Definitions:

Capital Balances

The amounts shown in a company's financial statements under shareholders' equity, representing the residual interests in the assets of the entity after deducting liabilities.

Goodwill Method

An accounting method used to evaluate the excess of purchase price over the fair value of net identifiable assets acquired in a business combination.

Journal Entries

Recorded transactions in the accounting records of a business that are used to transfer amounts from one account to another, ensuring the ledger remains in balance.

Fair Value

Fair value is an estimate of the market value of an asset, based on its current price in a fair and open market transaction.