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 start with the total income, add the accounts receivable at the beginning, and then subtract the accounts receivable at the end. This is because the accounts receivable at the beginning represent the unpaid credit sales from the previous period, and the accounts receivable at the end represent the unpaid credit sales from the current period. By subtracting these two values from the total income, we can calculate the amount of cash received from debtors. Therefore, option B is the correct rule for converting credit sales to cash received from debtors.

What Is the Rule for Converting Credit Sales to Cash