CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Determine net sales for 20x2 if the average days sales uncollected is 73 days and accounts receivable was $4,250 at the end of 20x1 and was $4,750 at the end of 20x2.
A. $23,750
B. $22,500
C. $21,250
Explanation: Net sales equals average accounts receivable multiplied by the receivable turnover. The receivable turnover equals 365 days divided by the average number of days sales are uncollected. Average accounts receivable equals $4,500 [($4,250 + $4,750)/2]. Therefore, net sales are $22,500 [($4,500 x (365/73)].

User Contributed Comments 3

User Comment
shiva5555 What does this 20X2 and 20X1 mean?
endurance any year ending on 1 or 2 in this century
cfastudypl They mean the opening and closing balances of the receivables accounts. That is, 20X1's value ($4,250) was the closing balance for 20X1 became the opening balance for 20X2. While $4,750 is the closing balance for 20X2.
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