If a firm averages $2,000 in daily credit sales and offers 60-day terms, the average accounts receivable balance will be $120,000.
Avg. A/R = Daily credit sales x credit terms
$120,000 = $2,000 x 60 days

Question

Quizplus · Accepted Answer

The formula for calculating average accounts receivable is correct and results in an average balance of $120,000, making the statement true.

If a Firm Averages $2,000 in Daily Credit Sales and Offers