A firm's total investment in accounts receivable at any point in time is determined by:
A)the amount of credit sales.
B)the credit period.
C)the firm's credit policy.
D)All of the above

Question

Quizplus · Accepted Answer

The amount of credit sales affects the total investment in accounts receivable because more credit sales lead to higher accounts receivable balances. The credit period also plays a role in determining the total investment in accounts receivable because a longer credit period means that customers have more time to pay their bills, leading to higher accounts receivable balances. The firm's credit policy, which includes factors such as credit limits and collection policies, also influences the total investment in accounts receivable. Therefore, all of the provided options (A, B, and C) impact a firm's total investment in accounts receivable.

A Firm's Total Investment in Accounts Receivable at Any Point