A firm's accounts receivables are $1,000,000;its net sales are $16,000,000.Its collection period is _____ days.
A)6
B)23
C)30
D)67

Question

Quizplus · Accepted Answer

To calculate the collection period, we use the following formula: 
Collection period = (Accounts receivable / Net sales) x 365 
= ($1,000,000 / $16,000,000) x 365 
= 22.8 days 
Since we are looking for the closest whole number, the answer is 23 days. Therefore, the best choice is B.

A Firm's Accounts Receivables Are $1,000,000;its Net Sales Are $16,000,000