{"id":23699,"date":"2025-06-17T21:03:03","date_gmt":"2025-06-17T21:03:03","guid":{"rendered":"https:\/\/gaviki.com\/blog\/?p=23699"},"modified":"2025-06-17T21:03:04","modified_gmt":"2025-06-17T21:03:04","slug":"true-or-false-longer-an-account-receivable-has-been-outstanding","status":"publish","type":"post","link":"https:\/\/gaviki.com\/blog\/true-or-false-longer-an-account-receivable-has-been-outstanding\/","title":{"rendered":"True or false longer an account receivable has been outstanding"},"content":{"rendered":"\n<p>True or false longer an account receivable has been outstanding. The less likely it is to be collected.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n<p><strong>Correct Answer: True<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p>The statement <strong>&#8220;The longer an account receivable has been outstanding, the less likely it is to be collected&#8221;<\/strong> is <strong>true<\/strong>. This principle is a fundamental concept in accounting and financial management, particularly in the area of credit and collections.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Why is it True?<\/h3>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Aging of Accounts Receivable:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Businesses often use an <em>aging schedule<\/em> to track accounts receivable by how long they have been outstanding\u2014usually grouped as 0\u201330 days, 31\u201360 days, 61\u201390 days, and over 90 days.<\/li>\n\n\n\n<li>The longer a receivable remains unpaid, the higher the probability that the customer may have forgotten, disputed, or is unable to pay due to financial issues.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Risk of Default Increases with Time:<\/strong>\n<ul class=\"wp-block-list\">\n<li>As time passes, the likelihood that the customer will face financial hardship, go out of business, or become unresponsive increases.<\/li>\n\n\n\n<li>This risk means the debt becomes harder to collect and is often considered <strong>doubtful or bad debt<\/strong>.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Allowance for Doubtful Accounts:<\/strong>\n<ul class=\"wp-block-list\">\n<li>In accrual accounting, companies estimate and account for uncollectible accounts using an <em>allowance for doubtful accounts<\/em>.<\/li>\n\n\n\n<li>The longer the account is outstanding, the more likely it is included in this allowance, reflecting its reduced collectability.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Collection Efforts and Costs:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Collecting old debts usually requires more time, effort, and expense, including letters, calls, or even legal action.<\/li>\n\n\n\n<li>These efforts may not always result in successful collection, further reducing the effective value of older receivables.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Conclusion:<\/h3>\n\n\n\n<p>Timely collection of receivables is crucial for maintaining cash flow and financial health. The longer a receivable goes unpaid, the lower the chance of eventual payment, which is why businesses prioritize collecting recent accounts and closely monitor overdue ones.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>True or false longer an account receivable has been outstanding. The less likely it is to be collected. The correct answer and explanation is: Correct Answer: True Explanation: The statement &#8220;The longer an account receivable has been outstanding, the less likely it is to be collected&#8221; is true. This principle is a fundamental concept in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-23699","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/23699","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=23699"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/23699\/revisions"}],"predecessor-version":[{"id":23700,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/23699\/revisions\/23700"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=23699"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=23699"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=23699"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}