If a firm averages $2,000 in daily credit sales and offers 60-day terms, the average accounts receivable balance will be $120,000.

Question

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If a firm averages $2,000 in daily credit sales, then the average monthly credit sales will be $60,000 (2,000 x 30 days). With 60-day terms, it means that the average accounts receivable balance will be $120,000 (60,000 x 2). Therefore, the statement is true.

If a Firm Averages $2,000 in Daily Credit Sales and Offers