The Effective Management of Accounts Receivable Requires Financial Managers to

question 77

Multiple Choice

The effective management of accounts receivable requires financial managers to

• A) review the credit history of new customers.
• B) provide prompt cash payments to suppliers.
• C) allow customers more time in paying their past due accounts.
• D) refuse bank-issued credit cards.

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Definitions:

Days' Sales

A measure that indicates how many days, on average, it takes a company to collect revenue after a sale has been made.

Retail Method

An estimating method used to calculate inventory cost, based on the retail price, to determine cost of goods sold and ending inventory.

Inventory Estimating

A method used to approximate the amount of inventory a business has without doing a detailed physical count, often applied in periodic inventory systems.

Merchandise Prices

The set prices at which goods are sold to consumers, influencing revenue, profit margins, and competitive positioning.