Final answer:
An accurate cash collection estimate from sales requires both a precise sales forecast and an accurate estimation of collection patterns. These factors are essential for financial planning and cash flow management in a business.
Step-by-step explanation:
A key to estimating an accurate amount of cash to be collected from sales is C. both the accuracy of the sales forecast and the accuracy of the estimated collection patterns for sales are keys.
The accuracy of the sales forecast ensures that you have a solid prediction of the future sales volume, while the accuracy of the estimated collection patterns for sales ensures you understand the timeline and manner in which you will actually receive cash from those sales.
It's crucial to have precise forecasts since business decisions are based on them, including production planning, staffing, and budgeting.
Similarly, knowing the collection patterns allows for accurate cash flow management, which is vital for the operation and financial stability of the business.
To further illustrate, the sales forecast allows for an anticipated amount of sales revenue, while the collection patterns dictate the proportion of sales that will be made on credit and the timeframe within which the customers will pay.
Both elements are fundamental for a business to prepare its financial projections and management.