Question 1

As of this morning, a firm had a ledger balance of $1,695 with no outstanding deposits or checks.Today, the firm deposited five checks in the amount of $32each and wrote a check in the amount of $465.What is the amount of the collection float as of the end of the day assuming none of these checks had cleared?

Accepted Answer

A)  $305
B)  $625
C)  $283
D)  $160
E)  $1,070F) A) and C)
G) B) and D)

Question 2

Which of these would be the most common evidence of indebtedness when a sale is made on open account?

Accepted Answer

A)  Sight draft
B)  Commercial draft
C)  Banker's acceptance
D)  Promissory note
E)  InvoiceF) None of the above
G) B) and D)

Question 3

In a typical month, a company receives 39 checks totaling $168,000.The payment on these checks is normally delayed by an average of 2.7 days.What is the average daily float? Assume 30 days in a month.

Accepted Answer

A)  $14,500
B)  $15,333
C)  $15,120
D)  $16,217
E)  $14,667F) B) and E)
G) C) and D)

Question 4

Credit scoring is the:

Accepted Answer

A)  categorizing of customers into groups based on the length of time it takes each customer to pay for purchases.
B)  compiling of a list of accounts receivables segregated by the length of time each receivable has been outstanding.
C)  evaluation of the opportunity costs of a credit policy.
D)  process of quantifying the probability of default when granting credit to customers.
E)  tracking of both the number and the size of customer orders over a period of time.F) B) and D)
G) B) and C)

Question 5

Which of these will tend to decrease the length of the credit period?

Accepted Answer

A)  Decrease in default risk
B)  Increase in the cost of the product
C)  Increase in competition
D)  Decrease in the size of the account
E)  Decrease in turnover rateF) A) and B)
G) B) and E)

Question 6

Which of these is most apt to delay the collection of cash?

Accepted Answer

A)  Having customers mail checks to a local lockbox rather than the home office
B)  Depositing checks throughout the day
C)  Posting payments to accounts receivable prior to making deposits
D)  Collecting mail more frequently
E)  Supplying customers with bar coded payment slipsF) C) and D)
G) B) and E)

Question 7

When are funds generally transferred into zero-balance accounts?

Accepted Answer

A)  Monthly
B)  Weekly
C)  Daily
D)  As needed
E)  NeverF) A) and B)
G) None of the above

Question 8

Cash concentration is best defined as:

Accepted Answer

A)  combining an entire firm's daily receipts into one bank deposit.
B)  combining a week's worth of cash receipts into one bank deposit.
C)  combining cash from multiple bank accounts into a firm's main bank accounts.
D)  using multiple lockboxes for collecting cash payments.
E)  combining a firm's bills so that disbursement checks are mailed only monthly.F) A) and B)
G) A) and C)

Question 9

Treble Note Music sells 1380 musical instruments a year at an average price per instrument of $795.All sales are credit sales with terms of 2/10, net 30.The company has found that 76 percent of its customers take advantage of the discounted price.What is the amount of the firm's average accounts receivable? The discount amount is applied to a customer's account only after payments have been received and processed.Assume a 365-day year.

Accepted Answer

A)  $43,565
B)  $44,485
C)  $45,890
D)  $46,825
E)  $46,100F) B) and C)
G) A) and E)

Question 10

Forest Living has annual credit sales of $11.65 million.The average collection period is 18 days.What is the average investment in accounts receivable as shown on the balance sheet? Assume a 365-day year.

Accepted Answer

A)  $546,000
B)  $625,450
C)  $510,899
D)  $574,521
E)  $493.156F) C) and D)
G) A) and B)

Question 11

You place an order for 380 units of Good Y at a unit price of $49.The supplier offers terms of 2/10, net 30.The supplier is offering you a discount of _____ on your order if you pay within ____ days.

Accepted Answer

A)  $372.40;10
B)  $1,489.60;30
C)  $372.40;20
D)  $1,489.60;10
E)  $372.40; 30F) B) and D)
G) All of the above

Question 12

The terms of sale are best defined as the:

Accepted Answer

A)  total invoice amount including all shipping costs and taxes.
B)  period of time during which a sale price applies.
C)  legal documents related to the credit sale of either goods or services.
D)  conditions under which a firm sells its goods or services for either cash or credit.
E)  process used to determine which customers will be granted credit and which will not.F) D) and E)
G) C) and D)

Question 13

Which one of the following is a primary benefit of implementing zero-balance accounts into a cash management system?

Accepted Answer

A)  Increased disbursements float
B)  Total elimination of all safety stocks
C)  Additional cash availability
D)  Decreased collection float
E)  Elimination of all floatF) B) and E)
G) B) and D)

Exam 17: Working Capital Management

Which of these is most apt to delay the collection of cash?

Correct Answer
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Correct Answer
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Which of these would be the most common evidence of indebtedness when a sale is made on open account?

Correct Answer
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Correct Answer
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Which one of the following is a primary benefit of implementing zero-balance accounts into a cash management system?

Correct Answer
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You place an order for 380 units of Good Y at a unit price of $49.The supplier offers terms of 2/10, net 30.The supplier is offering you a discount of _ on your order if you pay within days.

Correct Answer
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The terms of sale are best defined as the:

Correct Answer
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Cash concentration is best defined as:

Correct Answer
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When are funds generally transferred into zero-balance accounts?

Correct Answer
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Forest Living has annual credit sales of $11.65 million.The average collection period is 18 days.What is the average investment in accounts receivable as shown on the balance sheet? Assume a 365-day year.

Correct Answer
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Credit scoring is the:

Correct Answer
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In a typical month, a company receives 39 checks totaling $168,000.The payment on these checks is normally delayed by an average of 2.7 days.What is the average daily float? Assume 30 days in a month.

Correct Answer
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Which of these will tend to decrease the length of the credit period?

Correct Answer
verified

Exam 17: Working Capital Management

Which of these is most apt to delay the collection of cash?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of these would be the most common evidence of indebtedness when a sale is made on open account?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is a primary benefit of implementing zero-balance accounts into a cash management system?

Correct AnswerverifiedShow Answer

You place an order for 380 units of Good Y at a unit price of $49.The supplier offers terms of 2/10, net 30.The supplier is offering you a discount of _____ on your order if you pay within ____ days.

Correct AnswerverifiedShow Answer

The terms of sale are best defined as the:

Correct AnswerverifiedShow Answer

Cash concentration is best defined as:

Correct AnswerverifiedShow Answer

When are funds generally transferred into zero-balance accounts?

Correct AnswerverifiedShow Answer

Forest Living has annual credit sales of $11.65 million.The average collection period is 18 days.What is the average investment in accounts receivable as shown on the balance sheet? Assume a 365-day year.

Correct AnswerverifiedShow Answer

Credit scoring is the:

Correct AnswerverifiedShow Answer

In a typical month, a company receives 39 checks totaling $168,000.The payment on these checks is normally delayed by an average of 2.7 days.What is the average daily float? Assume 30 days in a month.

Correct AnswerverifiedShow Answer

Which of these will tend to decrease the length of the credit period?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

You place an order for 380 units of Good Y at a unit price of $49.The supplier offers terms of 2/10, net 30.The supplier is offering you a discount of _ on your order if you pay within days.

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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