- This topic has 1 reply, 2 voices, and was last updated 6 years ago by
.
Viewing 2 posts - 1 through 2 (of 2 total)
- Posts
How an overstatement of revenue would result into reduction, Not an increase in the receivable period?
See page 86 of the notes “Collection period, that is a number of days’ sales in receivables. It is calculated as receivables divided by sales per day.” (Or you should know the calculation from F3/FR = Receivables/(Sales/365) = Receivables/Sales X 365 = a # of days
Since you are dividing by sales, the number of days must decrease if revenue is overstated. You should always put #s into formulae to convince yourself and make sure you understand how they “work” if you are unsure.
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.