When Vince Cummings Was Reviewing Existing or Possible Obligations on the Balance

question 21

Multiple Choice

When Vince Cummings was reviewing existing or possible obligations on the balance sheet, he was told that the outcome for these obligations was uncertain and that the company was awaiting a future event. Vince Cummings was reviewing

• A) accruals.
• B) going concern.
• C) materiality.
• D) contingent liabilities.

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Definitions:

Days Receivable Outstanding

Days Receivable Outstanding (DRO) is a financial metric that calculates the average number of days it takes a company to collect payment after a sale has been made.

Accounts Receivable

Funds that customers owe a company for products or services that have been provided but remain unpaid.

Sales

The total amount of goods or services sold or provided to customers, generating revenue for a business.

Long-Term Debt To Assets

A ratio indicating the proportion of a company's assets that are financed through long-term debt, showing financial leverage.