1. Why is the realizable value of a credit sale often less than that of a cash? sale?
A. The retailers give a sales discount to customers paying with a credit card.
B. Some accounts will never be collected.? Therefore, the average amount collected on credit sales is less than the total amount of the sales.
C. Credit card transactions are easier to process than cash? transactions, and the retailers save money on credit card transactions.
D.The retailers are given a discount from the credit card companies when customers use a credit card for their purchase.
2. What is the relationship between the average collection period and the accounts receivable? turnover?
A. The days to collect accounts? receivable, or average collection? period, is 365 divided by the accounts receivable turnover.
B. There is little variability in accounts receivable turnover levels among industries.
C. The accounts receivable turnover is the average accounts receivable for the period during which the sales were made divided by credit sales.
D. There is no relationship between the average collection period and the accounts receivable turnover.