Accounts receivable turnover rate problem


Deegan Industries has an accounts receivable turnover rate of 8. Which of the following statements is not true?

a) Deegan's accounts receivable are more liquid than those of a business whose accounts receivable turnover rate is 5.

b) Deegan waits approximately 46 days to make collections of its credit sales. (Use 365 days in a year.)

c) Deegan writes off accounts receivable as uncollectible if they are over 45 days old.

d) Deegan's net credit sales are about eight times the amount of its average accounts receivable

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Accounting Basics: Accounts receivable turnover rate problem
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