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AICPA Exam CPA-Business Topic 2 Question 24 Discussion
Actual exam question for
AICPA's
CPA-Business exam
Question #: 24
Topic #: 2
[All CPA-Business Questions]
Topic #: 2
Which of the following represents a firm's average gross receivable balance?
I Days' sales in receivables x accounts receivable turnover.
II Average daily sales x average collection period.
III Net sales average gross receivables.
Suggested Answer:
C
Choice 'c' is correct. II only - Average daily sales ($27,397) Average collection period (36.5) = $1,000,000 Avg gross A/R
Not I Days' sales in receivables (36.5) AR turnover 10 = 365 days in year.
Not III Net sales ($10,000,000) Avg gross receivables ($1,000,000) = 10 AR turnover.
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