The accounts receivable turnover is computed by dividing
A) total sales by average net accounts receivable.
B) net credit sales by average net accounts receivable.
C) total sales by ending net accounts receivable.
D) net credit sales by ending net accounts receivable.

Question

Quizplus · Accepted Answer

The accounts receivable turnover measures how many times a company collects its average accounts receivable balance during a given period. Net credit sales represent the credit sales made by a company during a period, and average net accounts receivable is the average amount of money owed to the company by its customers over the same period. Therefore, the accounts receivable turnover is computed by dividing net credit sales by average net accounts receivable.

The Accounts Receivable Turnover Is Computed by Dividing