The statement,"collection of accounts receivable lags behind sales," means that:
A)the collection of funds in the accounts receivable is always late.
B)customers always are late in paying their bills.
C)the customers who purchased goods on credit may not pay until a month or more later.
D)None of the above

Question

Quizplus · Accepted Answer

The statement means that the collection of funds in the accounts receivable is slower than the rate of sales, which implies that some customers who purchased goods on credit may not pay until a month or more later. This may result in a delay in receiving funds and a potential cash flow problem for the company. Option A and B are incorrect because the statement is not related to customers' payment habits or a delay in payment in every situation.

The Statement,"collection of Accounts Receivable Lags Behind Sales," Means That