The number of days' sales uncollected is calculated by:
A)Dividing accounts receivable by net sales.
B)Dividing accounts receivable by net sales and then multiplying by 365.
C)Dividing net sales by accounts receivable.
D)Dividing net sales by accounts receivable and then multiplying by 365.
E)Multiplying net sales by accounts receivable and dividing the result by 365.

Question

Quizplus · Accepted Answer

The number of days' sales uncollected is a measure of how long it takes for a company to collect its accounts receivable. It is calculated by dividing accounts receivable by net sales and then multiplying the result by 365, which yields the average number of days that sales remain outstanding before they are collected. Therefore, choice B is the correct option.

The Number of Days' Sales Uncollected Is Calculated By