CarePair, a small business specializing in making and distributing hospital gowns to medical facilities, often sells its product on credit. The company maintains a ledger that divides accounts receivable into age categories based on the length of time they have been outstanding. Receivables 1-6 months old are deemed grade A (regular business); 7-12, grade B (overdue business); and 13-24, grade C (delinquent business); those accounts receivable over 24 months old are turned over to a collection agency. CarePair is relying on ____ to keep track of accounts receivable.
A) a collection categorization
B) an aging schedule
C) a delinquent adjustment schedule
D) a financial credit schedule

Question

Quizplus · Accepted Answer

CarePair is using an aging schedule to keep track of their accounts receivable. The aging schedule categorizes the receivables into different age categories based on how long they have been outstanding. This helps the company to identify overdue and delinquent accounts and take appropriate actions to collect payment. None of the other answer choices accurately describe the system that CarePair is using.

CarePair, a Small Business Specializing in Making and Distributing Hospital