If the Accounting Period Is One Year with Credit Sales

question 33

Multiple Choice

If the accounting period is one year with credit sales totaling $2,500,000 and accounts receivable totaling $200,000, the average collection period ratio is ________.

• A)29.2 days
• B)365 days
• C)119.3 days
• D)Cannot be determined from the information provided

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Definitions:

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been purchased or distributed to customers.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.

Raw Material Purchases

The acquisition of the basic inputs or resources that are converted through manufacturing processes into final products.

Factory Overhead

Costs related to the operation of a manufacturing plant which cannot be directly associated with specific units of production, such as utilities, maintenance, and management salaries.