Accounting for IGCSE & O level - Advanced Principles (Section 2 - No. 48)
Which of the following best describes the 'collection period' for trade receivables?
The amount of time a business takes to pay its suppliers.
The average time it takes for a business to convert inventory into cash.
The average time it takes for a business to collect cash from its customers after a sale.
The duration a business extends credit to its customers.
Explanation
The collection period measures the average time it takes for a business to receive payment from its customers.
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