Question

Which of the following is an account that is not affected by the sales and collection cycle?

A) Cash
B) Accounts receivable
C) Allowance for doubtful accounts
D) Accounts payable

Answer 1

Accounts Payable is the account that is not affected by the sales and collection cycle, while Cash, Accounts Receivable, and Allowance for Doubtful Accounts are all part of the cycle.

Step-by-step explanation:

The account that is not affected by the sales and collection cycle is Accounts Payable. Accounts Payable represents the amount a company owes to its suppliers for the purchase of goods or services on credit. It is not directly related to the sales and collection process.

On the other hand, Cash, Accounts Receivable, and Allowance for Doubtful Accounts are all part of the sales and collection cycle.

Cash is affected when customers make payments for goods or services. Accounts Receivable represents the amount owed to the company by its customers for credit sales. The Allowance for Doubtful Accounts is a contra-asset account that is used to estimate and reduce the value of accounts receivable that may not be collected.