Carla's Fashions has an average collection period of 30 days.You could infer that Carla's Fashions:
A)bills her customers semi-monthly.
B)bills her customers quarterly.
C)has an accounts receivable turnover of approximately 12.
D)Both A and C can be inferred.

Question

Quizplus · Accepted Answer

The average collection period is the average number of days it takes for a business to collect payment from its customers. Since Carla's Fashions has an average collection period of 30 days, this means that on average, it takes her 30 days to collect payment from her customers. This implies that her accounts receivable turnover is approximately 12 (365 days in a year divided by 30 days to collect payment). There is no information to suggest that Carla's Fashions bills her customers semi-monthly or quarterly.

Carla's Fashions Has an Average Collection Period of 30 Days