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The following annual account balances are taken from ABC Co at year end. & Current Year & 1 Year Ago Accounts Receivable & 49,500 & 48,000 Net Sales & 580,000 & 535,000 Days Sales Uncollected & 31.15 days & 32.74 days Select the statements below that are correct regarding ABC Co.'s ability to collect its receivables from customers. ABC Co. has increased the amount of time it takes to collect receivables from customers from 1 year ago. ABC Co. took approximately 31 days to collect cash from its credit customers in the current year. ABC Co. has shortened the amount of time it takes to collect receivables from customers from 1 year ago to the curre ABC Co. has shortened the amount of time that money is tied up in receivables from 1 year ago.

Question

The following annual account balances are taken from ABC Co at year end.

 & Current Year & 1 Year Ago 
 Accounts Receivable &  49,500 &  48,000 
 Net Sales &  580,000 &  535,000 
 Days Sales Uncollected & 31.15 days & 32.74 days 


Select the statements below that are correct regarding ABC Co.'s ability to collect its receivables from customers.
ABC Co. has increased the amount of time it takes to collect receivables from customers from 1 year ago.
ABC Co. took approximately 31 days to collect cash from its credit customers in the current year.
ABC Co. has shortened the amount of time it takes to collect receivables from customers from 1 year ago to the curre
ABC Co. has shortened the amount of time that money is tied up in receivables from 1 year ago.

The following annual account balances are taken from ABC Co at year end. & Current Year & 1 Year Ago Accounts Receivable & 49,500 & 48,000 Net Sales & 580,000 & 535,000 Days Sales Uncollected & 31.15 days & 32.74 days Select the statements below that are correct regarding ABC Co.'s ability to collect its receivables from customers. ABC Co. has increased the amount of time it takes to collect receivables from customers from 1 year ago. ABC Co. took approximately 31 days to collect cash from its credit customers in the current year. ABC Co. has shortened the amount of time it takes to collect receivables from customers from 1 year ago to the curre ABC Co. has shortened the amount of time that money is tied up in receivables from 1 year ago.

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RalphVeteran · Tutor for 10 years

Answer

The question is asking us to determine which statements are correct regarding ABC Co.'s ability to collect its receivables from customers based on the given data.<br /><br />Let's evaluate each statement one by one:<br /><br />1. "ABC Co. has increased the amount of time it takes to collect receivables from customers from 1 year ago."<br /> - This statement is incorrect. The Days Sales Uncollected for the current year is 31.15 days, which is less than the 32.74 days from 1 year ago. This means ABC Co. has decreased, not increased, the amount of time it takes to collect receivables.<br /><br />2. "ABC Co. took approximately 31 days to collect cash from its credit customers in the current year."<br /> - This statement is correct. The Days Sales Uncollected for the current year is indeed 31.15 days, which can be approximated to 31 days.<br /><br />3. "ABC Co. has shortened the amount of time it takes to collect receivables from customers from 1 year ago to the current year."<br /> - This statement is correct. As mentioned earlier, the Days Sales Uncollected has decreased from 32.74 days to 31.15 days, indicating a shorter collection period.<br /><br />4. "ABC Co. has shortened the amount of time that money is tied up in receivables from 1 year ago."<br /> - This statement is correct. A decrease in Days Sales Uncollected means that money is tied up in receivables for a shorter period of time.<br /><br />So, the correct statements are:<br /><br />- ABC Co. took approximately 31 days to collect cash from its credit customers in the current year.<br />- ABC Co. has shortened the amount of time it takes to collect receivables from customers from 1 year ago to the current year.<br />- ABC Co. has shortened the amount of time that money is tied up in receivables from 1 year ago.
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