The financial statements contain information for analyzing the collectibility of accounts receivable and the adequacy of the expense for uncollectible accounts.Typical ratios used for this analysis include the
A)accounts receivable turnover ratio, only.
B)days receivables outstanding, only.
C)write-off percentage, only.
D)accounts receivable turnover ratio, days receivables outstanding, and write-off percentage.
E)accounts receivable turnover ratio and days receivables outstanding, only.

Question

Quizplus · Accepted Answer

The best choice is D because it includes all three ratios typically used for analyzing the collectibility of accounts receivable and the adequacy of the expense for uncollectible accounts: accounts receivable turnover ratio, days receivables outstanding, and write-off percentage. Using only one or two of these ratios may provide incomplete or misleading information.

The Financial Statements Contain Information for Analyzing the Collectibility of Accounts