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:

Effective (Annualized) Yield

A calculation of the annual return on an investment, taking into account the effect of compounding interest.

Consumer Price Index

An index that measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Effective Annualized Rate

The interest rate on an investment or loan on an annual basis, taking compounding into account.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.