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AICPA Exam CPA-Business Topic 1 Question 40 Discussion
Actual exam question for
AICPA's
CPA-Business exam
Question #: 40
Topic #: 1
[All CPA-Business Questions]
Topic #: 1
The average collection period for a firm measures the number of days:
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.
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