Which of the following is NOT correct for a firm with seasonal sales and customers that all pay promptly at the end of 30 days?
A) DSO will vary from month to month.
B) The quarterly uncollected balances schedule will be the same in each quarter.
C) The level of accounts receivable will be constant from month to month.
D) The ratio of accounts receivable to sales will vary from month to month.

Question

Quizplus · Accepted Answer

If a firm has seasonal sales, the level of accounts receivable will not be constant from month to month. As sales increase, so will accounts receivable, and vice versa. Therefore, Option C is incorrect. Options A, B, and D are all correct for a firm with seasonal sales and customers that all pay promptly at the end of 30 days.

Which of the Following Is NOT Correct for a Firm