AICPA CPA-Business Exam - Topic 1 Question 40 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 40
Topic #: 1

[All CPA-Business 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

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AICPA CPA-Business Exam - Topic 1 Question 40 Discussion

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