CSLB Law & Business ExamBusiness FinancesMedium
A contractor's accounts receivable aging report shows: Current $5,000; 31-60 days $3,000; 61-90 days $2,000; Over 90 days $4,000. What percentage of total accounts receivable is more than 60 days past due?
- A42.9%
- B35.7%
- C50.0%
- D28.6%
Show answer & explanationAnswer & explanation
Correct answer: A. 42.9%
Total AR = $5,000 + $3,000 + $2,000 + $4,000 = $14,000. Amounts over 60 days = $2,000 + $4,000 = $6,000. $6,000 ÷ $14,000 = 42.9%.
Why the other options are wrong
- B. This understates the total; it omits part of the over-90-day balance.
- C. This overstates the past-due percentage; the correct ratio is closer to 43%.
- D. This would be the percentage for only the 31-60 day bucket, not over 60 days.
Accounts Receivable Aging Report
A report that categorizes unpaid customer invoices by how long they have been outstanding, helping a contractor manage collections and cash flow.
- Common buckets: current, 31-60, 61-90, over 90 days
- Helps identify slow-paying clients before cash flow suffers
- Older buckets signal higher collection risk
Memory trick: The older the invoice, the colder the cash.