If a company's accounts receivable turnover is increasing,the average collection period:
A) is going up slightly.
B) is going down.
C) could be moving in either direction.
D) is going up by a significant amount.

Question

Quizplus · Accepted Answer

An increasing accounts receivable turnover means that the company is collecting its receivables more quickly. Since the collection period is the length of time it takes to collect receivables, it must be decreasing to match the increase in turnover. Therefore, the best choice is B, the average collection period is going down.

If a Company's Accounts Receivable Turnover Is Increasing,the Average Collection