The number of days' sales uncollected is determined by dividing
A) the number of days in a year by average accounts receivable.
B) sales by average accounts receivable.
C) the number of days in a year by the receivable turnover.
D) net income by average accounts receivable.

Question

Quizplus · Accepted Answer

The number of days' sales uncollected is a measure of how many days it takes for a company to collect its accounts receivable. It is calculated by dividing the number of days in a year by the receivable turnover. This provides an estimate of the average number of days that receivables are outstanding before they are collected. A lower number of days' sales uncollected is generally better, as it indicates that a company is collecting its accounts receivable more quickly. Option C is the correct choice as it represents the formula for calculating this ratio.

The Number of Days' Sales Uncollected Is Determined by Dividing