Accounts receivable days are typically within which range?

Accounts receivable days are typically within which range?

• A. 0-15 days
• B. 15-30 days
• C. 30-60 days
• D. 60-90 days

Answer: (C)

The main idea here is understanding how long, on average, it takes to convert a sale into cash—the days sales outstanding (DSO). If a company typically offers net-30 terms, customers are expected to pay after about 30 days, so the average collection time tends to cluster around the 30-day mark. In practice, many businesses see DSO in the 30–60 day range because some payments arrive on time and some come in a bit late, but overall cash is still flowing reasonably. A very short DSO, like 0–15 days, would imply unusually fast payments for standard credit terms, which isn’t common for most B2B sales. A DSO of 60–90 days points to slower collections or significantly extended terms, which can create cash-flow problems. So, 30–60 days best reflects typical AR collection behavior for many companies.

The main idea here is understanding how long, on average, it takes to convert a sale into cash—the days sales outstanding (DSO). If a company typically offers net-30 terms, customers are expected to pay after about 30 days, so the average collection time tends to cluster around the 30-day mark. In practice, many businesses see DSO in the 30–60 day range because some payments arrive on time and some come in a bit late, but overall cash is still flowing reasonably. A very short DSO, like 0–15 days, would imply unusually fast payments for standard credit terms, which isn’t common for most B2B sales. A DSO of 60–90 days points to slower collections or significantly extended terms, which can create cash-flow problems. So, 30–60 days best reflects typical AR collection behavior for many companies.