ACCA Applied Knowledge · Financial Accounting · Analysis of financial statements
Alba Co had credit sales of $2,190,000 for the year. Trade receivables at the year end were $300,000. What is the receivables collection period in days (365-day year)?
The collection period is 50 days. Trade receivables of $300,000 are divided by credit sales of $2,190,000 and multiplied by 365, giving exactly 50 days on average for customers to pay.
- A50 daysCorrect
- B73 days
- C30 days
- D100 days
Explanation
Receivables days = 300,000 / 2,190,000 x 365 = 50 days. Distractor 73 would arise from wrongly using a base that excludes part of sales, which does not fit the data.
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