The rule for converting credit sales to cash received from debtors is:
A) income +/- debtors at the beginning +/- debtors at the end = cash received.
B) income + debtors at the beginning - debtors at the end = cash received.
C) income - debtors at the beginning + debtors at the end = cash received.
D) none of the above.

Question

Quizplus · Accepted Answer

To convert credit sales to cash received from debtors, we need to subtract the closing balance of debtors from the total of credit sales and opening balance of debtors. This is because the closing balance of debtors represents the amount due from debtors at the end of the period, which reduces the cash received from credit sales. Therefore, the correct formula is: income + debtors at the beginning - debtors at the end = cash received.

The Rule for Converting Credit Sales to Cash Received from Debtors