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AICPA Exam CPA-Business Topic 1 Question 44 Discussion
Actual exam question for
AICPA's
CPA Business Environment and Concepts exam
Question #: 44
Topic #: 1
[All CPA Business Environment and Concepts Questions]
Topic #: 1
An increase in sales collections resulting from an increased cash discount for prompt payment would be expected to cause a (n):
Suggested Answer:
C
Choice 'c' is correct. An increase in sales collections would decrease the cash conversion cycle.
Choice 'a' is incorrect because the operating cycle (as well as the cash conversion cycle) would decrease.
Choice 'b' is incorrect, as the average collection period would decrease.
Choice 'd' is incorrect. Bad debt losses would decrease from an increase in sales collections.
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