The average collection period reveals how many days, on average,
A)it takes between when an order is placed until the cash is collected.
B)the company takes to collect cash from a credit sale.
C)the company takes to collect past due accounts.
D)it takes between when an original contact is made to collect an account until the cash is collected.

Question

Quizplus · Accepted Answer

The average collection period measures the average number of days it takes a company to collect cash from a credit sale, indicating how efficiently the company is able to collect its accounts receivable. A is not correct because it refers to the entire process from order placement, which may include product delivery and other factors not related to collection. C is not correct because it refers specifically to past due accounts, which may not be representative of the overall collection process. D is not correct because it refers to an unclear "original contact" point, which may not accurately reflect the timing of the collection process.

The Average Collection Period Reveals How Many Days, on Average