If the accounting period is one year with credit sales totaling $2,500,000 and accounts receivable totaling $200,000, the average collection period ratio is ________.
A)29.2 days
B)365 days
C)119.3 days
D)Cannot be determined from the information provided

Question

Quizplus · Accepted Answer

The average collection period ratio is calculated by dividing the accounts receivable by the credit sales and multiplying by 365 days. In this case, the average collection period ratio is $200,000 / $2,500,000 * 365 days = 29.2 days.

If the Accounting Period Is One Year with Credit Sales