The average collection period measures the:
A)number of days from the time a typical credit sale is made until payment is received.
B)number of days it takes a typical check to "clear" through the banking system.
C)number of days beyond the end of the credit period before a typical customer payment is received.
D)number of days before a typical account becomes delinquent.

Question

Quizplus · Accepted Answer

The average collection period is the amount of time it takes for a company to collect payments from its customers after a sale has been made. It is calculated by dividing accounts receivable by average daily credit sales. The resulting figure represents the average number of days it takes for a company to collect payment from its customers. Therefore, the correct answer is A) number of days from the time a typical credit sale is made until payment is received.

The Average Collection Period Measures The