Accounts receivable are $120,000 and average daily credit sales are $4,000. What is days sales outstanding?
Correct Answer
C) 30 days.
DSO is accounts receivable divided by average daily credit sales: $120,000 / $4,000 = 30 days.
Why This Is the Correct Answer
DSO is accounts receivable divided by average daily credit sales: $120,000 / $4,000 = 30 days.
Why the Other Options Are Wrong
Option A: 20 days.
20 days. is below the supported result for dso; it likely uses the wrong base, period, or account bucket.
Option B: 24 days.
24 days. is below the supported result for dso; it likely uses the wrong base, period, or account bucket.
Option D: 40 days.
40 days. is above the supported result for dso; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Dso drawer for Reviewing Receivables: label accounts before counting dollars.
Reference Hint
Study anchor (closed-book): memorize DSO from CSLB Law and Business Study Guide; California tax and payroll guidance / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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