A general rule to use in assessing the average collection period is that
A) it should not exceed 30 days.
B) it can be any length as long as the customer continues to buy merchandise.
C) it should not greatly exceed the discount period.
D) it should not greatly exceed the credit term period.

Question

Quizplus · Accepted Answer

The average collection period measures how long it takes for a business to collect payments from its customers. It is important to ensure that this period does not greatly exceed the credit term period, which is the time period that the business allows for customers to pay their bills. If the average collection period is significantly longer than the credit term period, it can impact the cash flow and profitability of the business. Therefore, option D is the correct choice.

A General Rule to Use in Assessing the Average Collection