Asked by Martyna T?cza on Jun 28, 2024
Verified
The total investment in receivables mainly depends on the total amount of cash sales and the cash discount amount.
Cash Sales
Cash sales refer to transactions where payment is made in full using cash or cash equivalents at the time of purchase.
Cash Discount Amount
A reduction in the price of an item or service that is offered by the seller as an incentive for early payment by the buyer.
- Gain an understanding of the effect that credit sales and the average collection period have on the firm's outstanding receivables.
- Understand the impact of credit extension on a company's overall income, expenditures, and cash flow cycle.
Verified Answer
DB
Diamani BusseyJun 30, 2024
Final Answer :
False
Explanation :
The total investment in receivables mainly depends on the volume of credit sales and the terms of credit, including the collection period, rather than cash sales and cash discount amounts.
Learning Objectives
- Gain an understanding of the effect that credit sales and the average collection period have on the firm's outstanding receivables.
- Understand the impact of credit extension on a company's overall income, expenditures, and cash flow cycle.