Gainesville annual credit sales are $2,760,000, beginning receivables are $210,000, and ending receivables are $270,000. What accounts receivable turnover is shown?
Correct Answer
C) 11.5 times
Accounts receivable turnover uses annual credit sales divided by average accounts receivable.
Why This Is the Correct Answer
Accounts receivable turnover uses annual credit sales divided by average accounts receivable.
Why the Other Options Are Wrong
Option A: 10.5 times
10.5 times is below the supported result for accounts receivable turnover; it likely uses the wrong base, period, or account bucket.
Option B: 12.3 times
12.3 times is above the supported result for accounts receivable turnover; it likely adds an unsupported amount or compares the wrong financial base.
Option D: 13.0 times
13.0 times is above the supported result for accounts receivable turnover; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Accounts drawer for Controller Evaluates: label receivable before counting dollars.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section One, Managing Receivables, Track Your Receivables Trend; Section Three, Financial Ratios; use the job ledger figures in the stem and recompute the same accounting measure.
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