AICPA CPA-Business Exam - Topic 2 Question 24 Discussion

Actual exam question for AICPA's CPA-Business exam

Question #: 24
Topic #: 2

[All CPA-Business Questions]

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.

AI only.

BI and II only.

CII only.

DII and III only.

Show Suggested Answer

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.

by Portia at May 08, 2022, 06:35 PM

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Filiberto

4 months ago

Totally with you on that, II is crucial!

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Doretha

4 months ago

Wait, is III really a thing? Sounds off.

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Bulah

4 months ago

Average collection period is key for receivables.

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Reid

4 months ago

I disagree, I feel like I and II both matter.

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Lili

5 months ago

I think II is definitely part of it.

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Horace

5 months ago

From what I remember, a P3O is a virtual and decentralized setup, so I'll choose option C.

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Harris

5 months ago

Hmm, I'm a little unsure about this one. I know there's an option to create a new record, but I can't remember if that's "Save and New" or "Save As". I'll have to think this through carefully.

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Jacki

5 months ago

I'm a bit confused about the exact format. I know it needs to include the server's IP address, but do we also need to specify a specific path?

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