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A company has an accounts receivable balance of $300,000 as of the end of the year. Credit sales...

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A company has an accounts receivable balance of $300,000 as of the end of the year. Credit sales for the year totaled $2,000,000. What were the accounts receivable days outstanding as of the end of the year (not average for the year)?

Accounts Receivable Days Outstanding:

The accounts receivable days outstanding (or days sales outstanding) tells us the period of the collection of payments from credit customers from the time of sale. As the accounts receivable days outstanding increases, the longer it takes to receive payment.

Answer and Explanation: 1

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Let us compute the accounts receivable days outstanding as of the end of the year. We use the number of days in a year as 365 days. The formula is:

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Operating Cycle in Accounting: Definition & Formula

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Chapter 22 / Lesson 42
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An operating cycle consists of lead time, production time, sales time, delivery time, and cash-collection time. Learn the definitions of the parts of the operating cycle, how long the operation cycles are for different industries, and the formula used for calculating the operating cycle in accounting.


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