Which Statement About Accounts Receivable Is Correct

question 13

Multiple Choice

Which statement about accounts receivable is correct?

• A) If a security analyst saw that a firm's DSO was higher than the industry average and was also increasing and trending still higher, this would be interpreted as a sign of strength.
• B) If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its DSO will increase.
• C) There is no relationship between the DSO and the ACP. These ratios measure entirely different things.
• D) If a firm increases its sales while holding its accounts receivable constant, then, other things held constant, its days' sales outstanding will decline.

---

Definitions:

Ticket Revenue

Income generated from the sale of tickets, commonly associated with events, performances, transport services, or attractions.

Fixed Asset

Long-term tangible assets used in the operations of a business that are not expected to be converted to cash within a year, such as machinery, buildings, and equipment.

Market Value

The existing price point for buying or selling an asset or service in the marketplace.

Balance Sheet

A financial report offering an overview of a company's financial situation at a particular moment, detailing assets, liabilities, and the equity of shareholders.