A collection period equals _____.
A)[(accounts receivable)/(net sales)] x 365
B)(accounts receivable)/(net sales)
C)[(current assets)/net sales)] x 365
D)[(cash)+ (accounts receivable)/(net sales)] x 365

Question

Quizplus · Accepted Answer

A collection period is a measure of how many days on average it takes a company to collect payment from its customers after a sale is made. It is calculated by dividing the accounts receivable by the net sales and then multiplying by 365 to get the number of days. Therefore, the correct formula for the collection period is [(accounts receivable)/(net sales)] x 365, which is option A.

A Collection Period Equals _____