Asked by Kelly Dunsmore on Jul 08, 2024
Verified
The time period between the day a firm pays for its inventory item and the day it received payment from the customer who purchased that inventory item is called the accounts receivable period.
Accounts Receivable Period
The amount of time it takes for a company to collect payment from its customers after a sale has been made, indicative of the company's efficiency in collecting its receivables.
Inventory Item
refers to any product or goods that a company holds in stock with the intention of selling it to customers.
- Understand the connection between the operating cycle and the cash cycle.
Verified Answer
CJ
Chahine JebabliJul 10, 2024
Final Answer :
False
Explanation :
The time period described is known as the cash conversion cycle, which encompasses not just the accounts receivable period but also inventory period and accounts payable period. The accounts receivable period specifically refers to the time between the sale of the inventory and the collection of payment from the customer.
Learning Objectives
- Understand the connection between the operating cycle and the cash cycle.
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