Question

What would result in an increase in the Accounts Receivable days?

a. Net income decreases.

b. Net Accounts Receivable increases.

c. Number of days in the period decreases.

d. Net sales increases.

Answer 1

The correct answer is option b

Explanation:-

The formula to calculate the accounts receivable days is given as

From the above equation, we can conclude that accounts receivable days and net accounts receivable have a direct relationship. A direct relationship implies that accounts receivable days increases if net accounts receivable increases. Thus an increase in the net accounts receivable results in an increase in the Accounts Receivable days.