Asked by Mateo Hoyos on Jun 30, 2024
Verified
The number of days' sales uncollected is used to:
A) Measure how many days of sales remain until the end of the year.
B) Determine the number of days that have passed without collecting on accounts receivable.
C) Identify the likelihood of collecting sales on account.
D) Estimate how much time is likely to pass before the current amount of accounts receivable is received in cash.
E) Measure the amount of cash sales during a period.
Accounts Receivable
Financial obligations of customers to a business for received goods or services awaiting payment.
Sales Uncollected
Refers to revenue from sales for which payment has not yet been received; also known as accounts receivable.
Liquidity
The ability of a company or individual to quickly convert assets into cash without significant loss in value, essential for meeting short-term obligations.
- Understand the concept and importance of the number of days' sales uncollected in managing accounts receivable.
Verified Answer
ZK
Zybrea KnightJul 06, 2024
Final Answer :
D
Explanation :
The number of days' sales uncollected is a measure of how many days, on average, it takes for a company to collect payment from its customers, from the time the sale is made to when the cash is received. It estimates how much time is likely to pass before the current amount of accounts receivable is received in cash.
Learning Objectives
- Understand the concept and importance of the number of days' sales uncollected in managing accounts receivable.