Given an accounts receivable turnover of 10 and annual credit sales of $900,000,the average collection period is
A) 18.25 days.
B) 36.50 days.
C) 90 days.
D) 40.56 days.

Question

Quizplus · Accepted Answer

Accounts receivable turnover is defined as the number of times a company collects its average accounts receivable balance in a year. To find the average collection period, we need to divide the number of days in a year (365) by the accounts receivable turnover.

Average collection period = 365 / Accounts receivable turnover
= 365 / 10
= 36.5 days

Therefore, the correct answer is B) 36.50 days.

Given an Accounts Receivable Turnover of 10 and Annual Credit