Question

The numerator in the number of days' sales in receivables calculation is: a.accounts receivable ending balance. b.accounts receivable beginning balance. c.average daily sales. d.None of these choices are correct.

Answer 1

Answer:  Option A

                 

Explanation: Usually while calculating the number of days of receivables the average of the receivables is taken into consideration. But in case, the average could not be computed , ending balance of receivables is used for the purpose of calculation.

The formula shows how much time will it take to convert receivables into received cash.