Which of the following is most likely to increase days\' sales in accounts recei

Question

Which of the following is most likely to increase days' sales in accounts receivable at the
end of the year for Tep, Inc.? Why?

A. Credit terms were tightened on several large accounts during the current year.

B. Operating expenses increased at a higher rate than sales revenue.

C. Sales revenue increased at a higher rate than operating expenses.

D. A smaller percentage of sales occurred during the last month of the year, as compared
to the prior year.

E. A larger percentage of sales occurred during the last month of the year, as compared to
the prior year.

Explanation / Answer

Answer E. A larger percentage of sales occurred during the last month of the year, as compared to the prior year.                                                                                                                                                      The Accounts Receivables will increased as large percentage of sales occurred in the last month of the year and it will increase the amount of accounts receivables in the end of the year and cpnsequently it will increase the day's sales in the accounts receivables.

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