TechCom had net sales of $480,000 and average accounts receivable of $64,000. Its accounts receivable turnover was 7.5.

Question

Quizplus · Accepted Answer

Accounts receivable turnover is calculated by dividing net sales (or credit sales) by average accounts receivable. Thus, the formula is Accounts Receivable Turnover = Net Sales / Average Accounts Receivable. 
Substituting the values given in the question, we get: 
7.5 = $480,000 / $64,000 
Solving for the missing variable, we get: 
Average Accounts Receivable = $480,000 / 7.5 = $64,000 
Since the calculated average accounts receivable matches the value given in the question, the answer is true.

TechCom Had Net Sales of $480,000 and Average Accounts Receivable