average accounts receivable balance is a function of both the volume of credit sales and the days sales outstanding.

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The average accounts receivable balance is calculated by dividing the total accounts receivable by the number of days in the period being analyzed. The total accounts receivable is affected by both the volume of credit sales and the days sales outstanding, which measures how long it takes for customers to pay their invoices. Therefore, the average accounts receivable balance is a function of both variables.

Average Accounts Receivable Balance Is a Function of Both the Volume