Q:
1. (TCO 2) Select any actions that increase the cash account. Select all that apply: (Points : 3)
payment is received on a receivable
An interest payment on a notes payable is made
A payment due is received from a client
An old machine is sold for cash
2. (TCO 2) Which one of the following will increase the operating cycle? (Points : 3)
increasing the accounts payable period
decreasing the accounts payable turnover rate
decreasing the cash cycle
increasing the accounts receivable turnover rate
increasing the inventory period
3. (TCO 2) Assume Green Leaf Nursery anticipated sales of $630 in the first quarter.
Accounts receivable at the beginning of the year was $373. Assuming a collection period of
60 days, which is the approximate cash collection for the quarter? (Points : 3)
$420
$607
$590
$580
None of the above
4. (TCO 2) Best Environment Engineering wrote a check and mailed it to the Electric Co.
When the Electric Co. went to deposit the check, it discovered that the bank was closed due
to flooding in the area. It was 5 days before the Electric Co. could deposit the check from
Best Environment Engineering. Because the Electric Co.'s bank was closed: (Points : 3)
Best Environment's collection float decreased.
the Electric Co.'s collection float decreased.
Best Environment’s disbursement float increased.
the Electric Co.'s disbursements float increased.
the ledger balance of Best Environment was less than it would have been otherwise.
5. (TCO 2) Which of the following statements is false? Select all that apply: (Points : 3)
The optimal credit policy minimizes the total cost of granting credit.
Firms should avoid offering credit at all cost.
An increase in a firm's average collection period generally indicates that an increased
number of customers are taking advantage of the cash discount.
The costs of the credit application process and the costs expended in the collection
process are carrying costs of granting credit.
Character refers to the ability of a firm to meet its credit obligations out its operating
cash flows.
6. (TCO 2) You place an order for 100 units of inventory Part A at a unit price of $522. The
supplier offers terms of 2/25, net 40. How much should you remit if you take the
discount? (Points : 3)
$52,200
$51,156
$51,678
None of the above
7. (TCO 2) Auto Parts sells 1,200 electric parts per week and then reorders another 1,200
parts. If the relevant carrying cost per electric part is $4 and the fixed order cost is $750, what
is the total carrying cost and the restocking cost, respectively? (Points : 3)
$2,400 and $39,900
$3,200 and $33,800
$2,400 and $39,000
$3,400 and $30,000
None of the above
8. (TCO 2) Company ABC has expected sales of 12,000 units this year, an ordering cost of
$6 per order and carrying costs of $1.60 per unit. What is the average inventory? (Points : 3)
310 units
300 units
150 units
155 units
None of the above
9. (TCO 2) The ___________ is the time that elapses between the sale of an item and the
receipt of payment for that sale. (Points : 3)
accounts receivable period
accounts payable period
cash cycle
customer operating cycle
None of the above
10. (TCO 2) List three examples of short-term borrowing. (Points : 3)