The days' sales uncollected ratio is used to
A) Measure how many days of sales remain until the end of the year
B) Determine the number of days that have passed without collecting on accounts receivable
C) Identify the likelihood of collecting sales on account
D) Estimate how much time is likely to pass before cash receipts from credit sales equal the current amount of accounts receivable
E) Measure the amount of layaway sales for a period

Question

Quizplus · Accepted Answer

The days' sales uncollected ratio measures the average number of days that a company takes to collect payment after a sale has been made. It helps estimate the amount of time that is likely to pass before cash receipts from credit sales equal the current amount of accounts receivable. Therefore, D is the correct answer. Options A, B, C, and E are not related to the concept of days' sales uncollected ratio.

The Days' Sales Uncollected Ratio Is Used to