Table 15.6
A breakdown of Teffan, Inc.'s outstanding accounts receivable dated June 30, 2014 on the basis of the month in which the credit sale was initially made follows. The firm extends 30-day credit terms.
-An increase in accounts receivable turnover for a firm due to an increase in collection efforts will ________.
A) decrease the firm's marginal investments in accounts receivable
B) increase the firm's marginal investments in accounts receivable
C) decrease the firm's collection expense
D) increase the firm's bad debt expense

Question

Table 15.6
A breakdown of Teffan, Inc.'s outstanding accounts receivable dated June 30, 2014 on the basis of the month in which the credit sale was initially made follows. The firm extends 30-day credit terms. 
-An increase in accounts receivable turnover for a firm due to an increase in collection efforts will ________.
A) decrease the firm's marginal investments in accounts receivable 
B) increase the firm's marginal investments in accounts receivable 
C) decrease the firm's collection expense 
D) increase the firm's bad debt expense

Quizplus · Accepted Answer

An increase in accounts receivable turnover indicates that a company is collecting its receivables more quickly. This efficiency reduces the need for additional investments in accounts receivable, as funds are being recovered faster and can be used for other purposes.

Table 15.6 A Breakdown of Teffan, Inc.'s Outstanding Accounts Receivable Dated June