The number of days' sales uncollected is used to:
A) Measure the amount of cash sales during a period.
B) Identify the likelihood of collecting sales on account.
C) Estimate how much time is likely to pass before the current amount of accounts receivable is received in cash.
D) Measure how many days of sales remain until the end of the year.
E) Determine the number of days that have passed without collecting on accounts receivable.

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 estimates how much time is likely to pass before the current amount of accounts receivable is received in cash. This measure is calculated by dividing accounts receivable by the average daily sales which indicates the average number of days it takes a company to collect its accounts receivable.

The Number of Days' Sales Uncollected Is Used To