During the year, Caltech Inc.'s accounts receivable turnover rate increased from 10 to 12 times. The company makes credit sales only. The best explanation for the increase is that
A)the company's credit department did a better follow up with customers whose account balances became past due.
B)the company has recently dropped its credit check policy.
C)the company makes all customers pay cash instead of allowing purchases to be charged.
D)the company has more customers at the end of the year than it had at the beginning of the year.

Question

Quizplus · Accepted Answer

An increase in accounts receivable turnover rate means that the company is collecting its accounts receivable more frequently, which suggests that the credit department did a better follow-up with customers whose account balances became past due.

During the Year, Caltech Inc