Question

Assume your organization offers payment terms of net 30 days to all customers. Your accounting information system (AIS) reports that your average time to pay across all customers is 33.5 days. Does this result indicate a problem in your expenditures cycle?

Group of answer choices

a. No, this metric does not indicate any problems in the expenditures cycle.

b. No, a payment metric that exceeds its target by just over 10% is not a major concern.

c. Yes, any average in excess of 30 days indicates perpetual late payments.

d. It depends on the organization's risk tolerance threshold for customer payment timing.

Answer 1

Answer:

c. Yes, any average in excess of 30 days indicates perpetual late payments.Because of the AIS represent the average time of collection is more then 30 dayes that is 33.5 dayes.