A firm's average collection period has decreased significantly from the previous year. Which of the following could possibly explain the results?
A) Customers are paying off their accounts quicker.
B) Customers are taking longer to pay for purchases.
C) The firm has a stricter collection policy.
D) Both A and C.

Question

Quizplus · Accepted Answer

A decrease in the average collection period indicates that customers are paying their debts more quickly, which could be due to them paying off accounts quicker or the firm implementing a stricter collection policy.

A Firm's Average Collection Period Has Decreased Significantly from the Previous