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ACCA Applied Knowledge · Management Accounting · Accounting for management

A company's sales ledger system shows that 40 customers each owe between $2,000 and $5,000. The credit controller wants information to help her decide which accounts to chase first. Which of the following would make the data MOST useful as information for this purpose?

A list of balances ranked by age and size, with the total overdue beyond 60 days, is most useful. Good information must be relevant to the decision being made, and this presentation directly shows which debts are most urgent, unlike an alphabetical list, a customer count or account opening dates.

  1. AAn alphabetical list of customer names
  2. BA list of balances ranked by age of debt and size, with the total overdue beyond 60 daysCorrect
  3. CThe total number of customers on the ledger
  4. DA list of the dates each customer account was opened

Explanation

Information is useful when it is relevant to the decision. Ranking balances by age and size and highlighting amounts over 60 days directly supports prioritising collection. The other options contain little or no relevance to which accounts to chase first.

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