Calculating the turnover of receivables is often used in testing the sales cycle by auditors when performing
A)trend analysis.
B)ratio analysis.
C)reasonableness testing.
D)non-statistical sampling.

Question

Quizplus · Accepted Answer

Turnover of receivables is a ratio that is used to test the efficiency of a company's collections of accounts receivable. It is calculated by dividing net credit sales by the average accounts receivable balance over a certain period. This calculation falls under ratio analysis, which is used by auditors to evaluate a company's financial performance and determine potential areas of risk.

Calculating the Turnover of Receivables Is Often Used in Testing