Which of the following is true?
A)Accounts receivable decline as companies sell on credit.
B)Accounts receivable increase as companies receive payment.
C)Receivables turnover refers to how fast receivables are collected.
D)Days to Collect will increase as the receivables turnover increases.

Question

Quizplus · Accepted Answer

Receivables turnover is a ratio that measures how many times a company collects its average accounts receivable balance during a specific period. Therefore, it refers to how fast receivables are collected.

Option A is incorrect because accounts receivable increase when companies sell on credit.

Option B is incorrect because accounts receivable decline when companies receive payment.

Option D is incorrect because days to collect will decrease as receivables turnover increases.

Which of the Following Is True