which of the following events is most likely to increase the accounts receivable turnover rate? A)...

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Question

which of the following events is most likely to increase the accounts receivable turnover rate? A)...

which of the following events is most likely to increase the accounts receivable turnover rate?

A) a decrease in sales

B) faster collection on accounts receivable
C) an increase in sales
D) slower collection of accounts receivable

business accounting

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Answer 1

Answer #1

Answer

--Account receivables Turnover rate = Net (Credit) Sales / Average accounts receivables

--Ratio would increase if:
Sales (Numerator) increases OR Average account receivables (Denominator) Decreases.

--Correct Answer = Option 'C' An Increase in Sales will likely increase the accounts receivable turnover rate, because sales is used as a numerator for computing the given rate.

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Answer 2

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