Calculation of a firm's average collection period is the same as calculating the:
A)accounts receivable cycle
B)inventory cycle
C)accounts payable cycle
D)short-term operating cycle

Question

Quizplus · Accepted Answer

The average collection period measures the time it takes for a firm to collect payment from its customers, which is a component of the accounts receivable cycle. Therefore, the correct answer is A.

B, C, and D are incorrect choices as they do not accurately reflect the calculation of the average collection period. The inventory cycle refers to the time it takes a firm to sell and replace its inventory, the accounts payable cycle measures the time it takes for a firm to pay off its debts to suppliers, and the short-term operating cycle is a broader measure that includes all components of a firm's operating cycle.

Calculation of a Firm's Average Collection Period Is the Same