Analyzing days sales outstanding (DSO)and the aging schedule are two common methods for monitoring receivables.However,they can provide erroneous signals to credit managers when
A) Customers' payments patterns are changing.
B) Sales fluctuate seasonally.
C) Some customers take the discount and others do not.
D) Sales are relatively constant,either seasonally or cyclically.
E) None of the above.

Question

Quizplus · Accepted Answer

When sales fluctuate seasonally, it can distort the DSO and aging schedule, making it appear that receivables are being collected slower or faster than they actually are.

Analyzing Days Sales Outstanding (DSO)and the Aging Schedule Are Two