Which of the following statements is NOT true regarding accounts receivable turnover?
A)In general, the higher the ratio, the better.
B)If the accounts receivable turnover ratio is too high, this may indicate that credit is too tight and the company may be losing sales to good customers.
C)Accounts receivable turnover is computed by dividing net sales by end of the year receivables.
D)Accounts receivable turnover is computed by dividing net sales by average accounts receivable.

Question

Quizplus · Accepted Answer

Accounts receivable turnover is computed by dividing net sales by end of the year receivables is not a true statement. The correct statement is that accounts receivable turnover is computed by dividing net sales by average accounts receivable.

Which of the Following Statements Is NOT True Regarding Accounts