AICPA Exam CPA-Business Topic 1 Question 40 Discussion

Actual exam question for AICPA's CPA Business Environment and Concepts exam

Question #: 40
Topic #: 1

[All CPA Business Environment and Concepts Questions]

The average collection period for a firm measures the number of days:

AAfter a typical credit sale is made until the firm receives the payment.

BIt takes a typical check to 'clear' through the banking system.

CBefore a typical account becomes delinquent.

DIn the inventory cycle.

Show Suggested Answer

Suggested Answer: A

Choice 'a' is correct. The average collection period for a firm measures the number of days after a typical credit sale is made until the firm receives the payment.

Choice 'b' is incorrect. 'Float' measures the number of days it takes a typical check to 'clear' through the banking system.

Choice 'c' is incorrect. 'Credit period (term)' measures the number of days before a typical account becomes delinquent.

Choice 'd' is incorrect. 'Average days sales in inventory' measures the number of days in the inventory cycle.

by Fletcher at May 08, 2022, 06:11 AM

Limited Time Offer

25%

Off

Get Premium CPA-Business Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Currently there are no comments in this discussion, be the first to comment!