A general rule to use in assessing the average collection period is that it
A)should not greatly exceed the credit term period.
B)should not exceed 30 days.
C)can be any length as long as the customer continues to buy merchandise.
D)should not greatly exceed the discount period.

Question

Quizplus · Accepted Answer

The average collection period is the time it takes for a business to receive payment for its accounts receivable. Ideally, the average collection period should not greatly exceed the credit term period, which is the time allowed for customers to pay their invoices. This ensures that the business is receiving payments on time and is not facing cash flow problems. A longer average collection period can indicate that customers are not paying on time, which can lead to bad debts and financial difficulties for the business.

A General Rule to Use in Assessing the Average Collection