Question 1

Which one of these statements concerning the cash cycle is correct?

Accepted Answer

A)  The cash cycle is equal to the operating cycle minus the inventory period.
B)  A negative cash cycle is actually preferable to a positive cash cycle.
C)  Granting credit to slower paying customers tends to decrease the cash cycle.
D)  The cash cycle plus the accounts receivable period is equal to the operating cycle.
E)  The most desirable cash cycle is the one that equals zero days.F) B) and D)
G) None of the above

Question 2

Costs of the firm that fall with increased levels of investment in its current assets are called ________ costs.

Accepted Answer

A)  carrying
B)  shortage
C)  debt
D)  equity
E)  payablesF) A) and E)
G) A) and D)

Question 3

The length of time between the acquisition of inventory and its sale is called the:

Accepted Answer

A)  operating cycle.
B)  inventory period.
C)  accounts receivable period.
D)  accounts payable period.
E)  cash cycle.F) D) and E)
G) A) and E)

Question 4

The manager responsible for applying payments to customer's accounts is the:

Accepted Answer

A)  controller.
B)  payables manager.
C)  credit manager.
D)  purchasing manager.
E)  production manager.F) A) and B)
G) C) and D)

Question 5

Net working capital is defined as the:

Accepted Answer

A)  current assets of a business.
B)  difference between current assets and current liabilities.
C)  present value of short-term cash flows.
D)  difference between all assets and liabilities.
E)  difference between total current assets and cash.F) B) and C)
G) A) and E)

Question 6

Dixon's has a beginning receivables balance on January 1st of $930.Sales for January through April are $970,$1,050,$1,330,and $1,460,respectively.The accounts receivable period is 36 days.How much did the firm collect in the month of March? Assume a 30-day month.

Accepted Answer

A)  $1,034
B)  $1,316
C)  $1,289
D)  $1,350
E)  $1,180F) C) and D)
G) A) and D)

Question 7

Quiet Press has an accounts receivable period of 38 days.The estimated quarterly sales for this year,starting with the first quarter,are $1,200,$1,400,$1,900,and $1,200,respectively.How much does the firm expect to collect in the fourth quarter? Assume a 360-day year.

Accepted Answer

A)  $1,592.08
B)  $1,604.44
C)  $1,495.56
D)  $1,509.11
E)  $1,660.02F) A) and E)
G) A) and D)

Question 8

The cash cycle will decrease as a result of increasing the:

Accepted Answer

A)  payables turnover.
B)  days sales in inventory.
C)  operating cycle.
D)  inventory turnover rate.
E)  accounts receivable period.F) A) and B)
G) None of the above

Question 9

Given a fixed level of sales and a constant profit margin,an increase in the accounts payable period can result from:

Accepted Answer

A)  an increase in the cost of goods sold account value.
B)  an increase in the ending accounts payable balance.
C)  an increase in the cash cycle.
D)  a decrease in the operating cycle.
E)  a decrease in the average accounts payable balance.F) C) and D)
G) B) and D)

Question 10

Which one of the following is a source of cash?

Accepted Answer

A)  An increase in accounts receivable
B)  An increase in fixed assets
C)  A decrease in long-term debt
D)  The payment of a cash dividend
E)  An increase in accounts payableF) A) and D)
G) None of the above

Question 11

Given a flexible financing policy,a growing firm generally has a permanent requirement for:

Accepted Answer

A)  both current and long-term assets.
B)  long-term assets only.
C)  short-term debt.
D)  both short- and long-term debt.
E)  current assets and short-term debt.F) A) and C)
G) B) and D)

Question 12

A prearranged,short-term bank loan up to a specified limit,made on a formal or informal basis,is called a:

Accepted Answer

A)  letter of credit.
B)  cleanup loan.
C)  compensating balance.
D)  line of credit.
E)  roll-over.F) C) and D)
G) A) and E)

Question 13

Last year,Wilson's had credit sales of $927,000 and cost of goods sold of $762,000.The beginning of the year inventory was $138,000 and the end of the year inventory was $154,300.If the accounts receivables average $87,400,what is the operating cycle?

Accepted Answer

A)  88.23 days
B)  104.42 days
C)  78.60 days
D)  70.01 days
E)  92.09 daysF) C) and E)
G) A) and E)

Question 14

As of the beginning of the quarter,Lester's Market had a cash balance of $326.During the quarter the market paid suppliers $310,collected $418 on its accounts receivables,paid an interest payment of $32,and a tax bill of $184.In addition,the market borrowed $80.What was the cash balance at the end of the quarter?

Accepted Answer

A)  $298
B)  $267
C)  $255
D)  $272
E)  $286F) A) and B)
G) A) and C)

Question 15

A fraction of the available credit on a loan agreement deposited by the borrower with the bank in a low or non-interest-bearing account is called a:

Accepted Answer

A)  compensating balance.
B)  cleanup loan.
C)  letter of credit.
D)  line of credit.
E)  roll-over.F) B) and E)
G) All of the above

Question 16

Which party(ies) is(are) ultimately responsible for an invoice from a supplier that is subject to a bankers' acceptance?

Accepted Answer

A)  The bank which issued the acceptance
B)  The purchasing firm
C)  The investors who purchased the banker's acceptance
D)  The vendor who issued the invoice
E)  Both the bank and the purchasing firm jointlyF) A) and D)
G) A) and C)

Question 17

Shortage costs include all the following except the:

Accepted Answer

A)  opportunity costs related to a low return on assets.
B)  order costs.
C)  disruption of production schedules.
D)  production setup costs.
E)  lost sales.F) None of the above
G) A) and E)

Question 18

In working capital management,there are some actions that increase or decrease cash.What are some of the items that increase and decrease the cash account,respectively?

Accepted Answer

There are several activities that will i...

Question 19

Clancy's has a beginning cash balance of $27 and a net cash inflow for the quarter of −$52.Company policy is to maintain a minimum cash balance of $20 and borrow only the amount that is necessary to maintain that balance.How much,if any,does the firm need to borrow this quarter?

Accepted Answer

A)  $17
B)  $52
C)  $45
D)  $25
E)  $0F) A) and E)
G) A) and C)

Question 20

The cash cycle equals the:

Accepted Answer

A)  inventory period plus the accounts receivable period.
B)  change in net working capital divided by daily sales.
C)  operating cycle plus the accounts payable period.
D)  operating cycle minus the inventory period.
E)  operating cycle minus the accounts payable period.F) A) and B)
G) A) and C)

Exam 26: Short-Term Finance and Planning

The cash cycle equals the:

Correct Answer
verified

Given a fixed level of sales and a constant profit margin,an increase in the accounts payable period can result from:

Correct Answer
verified

Dixon's has a beginning receivables balance on January 1st of $930.Sales for January through April are $970,$1,050,$1,330,and $1,460,respectively.The accounts receivable period is 36 days.How much did the firm collect in the month of March? Assume a 30-day month.

Correct Answer
verified

Clancy's has a beginning cash balance of $27 and a net cash inflow for the quarter of −$52.Company policy is to maintain a minimum cash balance of $20 and borrow only the amount that is necessary to maintain that balance.How much,if any,does the firm need to borrow this quarter?

Correct Answer
verified

A prearranged,short-term bank loan up to a specified limit,made on a formal or informal basis,is called a:

Correct Answer
verified

Quiet Press has an accounts receivable period of 38 days.The estimated quarterly sales for this year,starting with the first quarter,are $1,200,$1,400,$1,900,and $1,200,respectively.How much does the firm expect to collect in the fourth quarter? Assume a 360-day year.

Correct Answer
verified

Which one of the following is a source of cash?

Correct Answer
verified

Which party(ies) is(are) ultimately responsible for an invoice from a supplier that is subject to a bankers' acceptance?

Correct Answer
verified

Correct Answer
verified

Shortage costs include all the following except the:

Correct Answer
verified

The manager responsible for applying payments to customer's accounts is the:

Correct Answer
verified

A fraction of the available credit on a loan agreement deposited by the borrower with the bank in a low or non-interest-bearing account is called a:

Correct Answer
verified

Costs of the firm that fall with increased levels of investment in its current assets are called ________ costs.

Correct Answer
verified

The length of time between the acquisition of inventory and its sale is called the:

Correct Answer
verified

The cash cycle will decrease as a result of increasing the:

Correct Answer
verified

In working capital management,there are some actions that increase or decrease cash.What are some of the items that increase and decrease the cash account,respectively?

Correct Answer
verified
There are several activities that will i...
View Answer

Last year,Wilson's had credit sales of $927,000 and cost of goods sold of $762,000.The beginning of the year inventory was $138,000 and the end of the year inventory was $154,300.If the accounts receivables average $87,400,what is the operating cycle?

Correct Answer
verified

Net working capital is defined as the:

Correct Answer
verified

Which one of these statements concerning the cash cycle is correct?

Correct Answer
verified

Given a flexible financing policy,a growing firm generally has a permanent requirement for:

Correct Answer
verified

Exam 26: Short-Term Finance and Planning

The cash cycle equals the:

Correct AnswerverifiedShow Answer

Given a fixed level of sales and a constant profit margin,an increase in the accounts payable period can result from:

Correct AnswerverifiedShow Answer

Dixon's has a beginning receivables balance on January 1st of $930.Sales for January through April are $970,$1,050,$1,330,and $1,460,respectively.The accounts receivable period is 36 days.How much did the firm collect in the month of March? Assume a 30-day month.

Correct AnswerverifiedShow Answer

Clancy's has a beginning cash balance of $27 and a net cash inflow for the quarter of −$52.Company policy is to maintain a minimum cash balance of $20 and borrow only the amount that is necessary to maintain that balance.How much,if any,does the firm need to borrow this quarter?

Correct AnswerverifiedShow Answer

A prearranged,short-term bank loan up to a specified limit,made on a formal or informal basis,is called a:

Correct AnswerverifiedShow Answer

Quiet Press has an accounts receivable period of 38 days.The estimated quarterly sales for this year,starting with the first quarter,are $1,200,$1,400,$1,900,and $1,200,respectively.How much does the firm expect to collect in the fourth quarter? Assume a 360-day year.

Correct AnswerverifiedShow Answer

Which one of the following is a source of cash?

Correct AnswerverifiedShow Answer

Which party(ies) is(are) ultimately responsible for an invoice from a supplier that is subject to a bankers' acceptance?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Shortage costs include all the following except the:

Correct AnswerverifiedShow Answer

The manager responsible for applying payments to customer's accounts is the:

Correct AnswerverifiedShow Answer

A fraction of the available credit on a loan agreement deposited by the borrower with the bank in a low or non-interest-bearing account is called a:

Correct AnswerverifiedShow Answer

Costs of the firm that fall with increased levels of investment in its current assets are called ________ costs.

Correct AnswerverifiedShow Answer

The length of time between the acquisition of inventory and its sale is called the:

Correct AnswerverifiedShow Answer

The cash cycle will decrease as a result of increasing the:

Correct AnswerverifiedShow Answer

In working capital management,there are some actions that increase or decrease cash.What are some of the items that increase and decrease the cash account,respectively?

Correct AnswerverifiedThere are several activities that will i...View AnswerShow Answer

Last year,Wilson's had credit sales of $927,000 and cost of goods sold of $762,000.The beginning of the year inventory was $138,000 and the end of the year inventory was $154,300.If the accounts receivables average $87,400,what is the operating cycle?

Correct AnswerverifiedShow Answer

Net working capital is defined as the:

Correct AnswerverifiedShow Answer

Which one of these statements concerning the cash cycle is correct?

Correct AnswerverifiedShow Answer

Given a flexible financing policy,a growing firm generally has a permanent requirement for:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
There are several activities that will i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified