Theoretically, in computing the accounts receivable turnover, the numerator should include
A) net sales.
B) net credit sales.
C) total sales.
D) total credit sales.

Question

Quizplus · Accepted Answer

The numerator in the accounts receivable turnover formula should only include net credit sales because this represents the sales on which customers have not yet paid, which is what accounts receivable measures. Net sales and total sales include cash sales, which have already been paid, and total credit sales includes credit sales that may not be included in accounts receivable yet.

Theoretically, in Computing the Accounts Receivable Turnover, the Numerator Should