Which describes the variables that determined the average accounts receivable balance?
A)The average accounts receivables balance is determined jointly by the volume of credit sales, and the accounts payable days outstanding.
B)he average accounts receivables balance is determined jointly by the volume of credit sales, and the days' sales outstanding.
C)The average sales balance is determined jointly by the volume of credit sales, and the days' sales outstanding.
D)The average inventory balance is determined jointly by the volume of credit sales and the days' sales outstanding.

Question

Quizplus · Accepted Answer

The average accounts receivables balance is determined by both the volume of credit sales and the days' sales outstanding. This means that the higher the volume of credit sales and the longer it takes customers to pay, the higher the average accounts receivable balance will be. Option A is incorrect because accounts payable days outstanding refers to how long it takes a company to pay its own bills and is not applicable to accounts receivable. Option C is incorrect because it mentions the average sales balance instead of accounts receivable balance. Option D is incorrect because it refers to inventory, which is not relevant to determining accounts receivable balance.

Which Describes the Variables That Determined the Average Accounts Receivable