Table 14.6
A breakdown of Teffan,Inc.'s outstanding accounts receivable dated June 30,2019 on the basis of the month in which the credit sale was initially made follows.The firm extends 30-day credit terms.
-An evaluation of the firm's collection efforts based on the aging schedule would suggest ________.(See Table 14.6)
A)poor credit management
B)satisfactory credit management
C)superior credit management
D)overzealous collection efforts

Question

Table 14.6
A breakdown of Teffan,Inc.'s outstanding accounts receivable dated June 30,2019 on the basis of the month in which the credit sale was initially made follows.The firm extends 30-day credit terms. 
-An evaluation of the firm's collection efforts based on the aging schedule would suggest ________.(See Table 14.6)
A)poor credit management 
B)satisfactory credit management 
C)superior credit management 
D)overzealous collection efforts

Quizplus · Accepted Answer

According to the aging schedule, there are a significant number of accounts that are 31-60 days past due and some accounts are even more than 60 days past due. This suggests that the firm's credit management is poor as they are not able to collect the outstanding accounts receivable within the credit period. They need to improve their collection efforts to avoid any cash flow issues.

Table 14.6 A Breakdown of Teffan,Inc.'s Outstanding Accounts Receivable Dated June 30,2019