What is the rule for converting credit sales to cash received from debtors?
A)income - accounts receivable at the beginning + accounts receivable at the end = cash received.
B)income + accounts receivable at the beginning - accounts receivable at the end = cash received.
C)income + or - accounts receivable at the beginning + or - accounts receivable at the end = cash received.
D)none of the above.

Question

Quizplus · Accepted Answer

To convert credit sales to cash received from debtors, we need to adjust the beginning and ending accounts receivable balances. Accounts receivable at the beginning represents the amount of credit sales from the previous period that has not been collected yet, while accounts receivable at the end represents the credit sales from the current period that has not been collected yet. Subtracting the ending accounts receivable balance from the beginning accounts receivable balance will give us the total accounts receivable collection for the period. Adding this amount to the sales figure will give us the cash received from debtors. Therefore, the correct formula is: income + accounts receivable at the beginning - accounts receivable at the end = cash received.

What Is the Rule for Converting Credit Sales to Cash