This is likely to happen when the company decides to extend their credit term

a. lower sales, higher receivable turnover, longer collection period

b. lower sales, higher receivable turnover, shorter collection period
c. higher sales, lower receivable turnover, shorter collection period

d. higher sales, lower receivable turnover, longer collection period

Assuming that net credit sales is constant, what determines an increase in average collection
period?
Select one:
a. none of the above
b. an increase in accounts receivable
c. a decrease in accounts receivable turnover

d. a decrease in accounts receivable

It measures the rate of cash inflow from the collection receivables.

Select one:
a. average accounts receivable
b. accounts receivable turnover
c. average collection period

d. aging of receivables

It is a deduction in the invoice price of the merchandise.

Select one:
a. trade discount
b. credit term
c. none of the above

d. cash discount
When factoring accounts receivables, the factor is the.

a. methods of determining how much money is lent to the firm

b. financial institution that buys the accounts receivable
c. negotiated accounts receivable accounts

d. percent deduction in payment to the firm

It is a deduction in the purchased price to serve as an incentive for prompt payment.

a. none of the above

b. cash discount
c. credit term

d. trade discount

It is the average length of time required to convert a firm receivables into cash.
Select one:
a. inventory conversion period
b. receivables collection period
c. days sales outstanding

d. cash conversion cycle

This is the effect on working capital and current ratio if the company issued a promissory note in
exchange for its accounts receivable.
Select one:
a. no effect in working capital and current ratio
b. decrease in working capital and current ratio
c. increase in working capital and current ratio

d. decrease in working capital and no effect in current ratio

A firm sales amount to 1,200,000. Sales terms are being revised from n/60 to n/45 and sales
are expected to decrease by 15 percent. How much is the increase or decrease in receivables
as a result of this change?

a. 50,000
b. (72,500)
c. none of the above

d. (52,500)

Which of the following items is not included in determining the desired level of accounts
receivable?

a. desired number of days of accounts receivable

b. net sales
c. number of days in a year

d. none of the above

When the company decides to decrease its discount rate.

a. collection period is shorter

b. collection is slower and receivable turnover is lower
c. receivable turnover is lower

d. collection is slower

Brew has an average payment period of 30 days, an average age of inventory of 20 days, and
a cash conversion cycle of 30 days. What is Brew average collection period?

a. 80 days
b. 20 days
c. 40 days

d. none of the above

Analysing the days sales outstanding and the aging schedule are two common methods for
monitoring receivables. However, they can provide erroneous signals to credit manager when

a. customer payment patterns are changing

b. some customers take the discount and others do not
c. sales fluctuates seasonally

d. sales are relatively constant, either seasonally or cyclically

The firms receivable conversion period measured in days is equal to its accounts receivable
divided by its

a. annual sales by 360

b. none of the above
c. annual credit sales

d. annual credit sales by 360

This is likely to happen when the company decides to increase their discount rate.

a. faster collection, higher receivable turnover, shorter collection period

b. faster collection, higher receivable turnover, longer collection period
c. slower collection, higher receivable turnover, shorter collection period

d. slower collection, higher receivable turnover, longer collection period

A company accounts receivable total 25,000 and the turnover rate is 15 times in one year. A
turnover rate of 10 times in a year is desired to increase sales by 20 percent. How much must be
the increase or decrease in the accounts receivable.

a. 25,000 increase
b. 45,000 increase
c. 45,000 decrease

d. none of the above

It is the process of administering sales credit, enforcing credit and collection policies, and
maintaining an appropriate level of receivables.

a. receivable management
b. receivable turnover
c. none of the above

d. working capital management

Which of the following is likely to happen when the company decides to reduce its credit
period.

a. lower sales, decrease receivable turnover, longer collection period

b. lower sales, increase receivable turnover, shorter collection period
c. higher sales, increase receivable turnover, longer collection period

d. higher sales, decrease receivable turnover, shorter collection period

For the company of Mr. Hapal Moe, the average age of accounts receivable is 30 days, the
average age of accounts receivable is 50 days, and the age of inventory is 40 days. If Mr. Moe
annual sales is 90,000 what is the firm average accounts receivable balance. Assume a 360
day year.

a. 100,000
b. 75,000
c. 125,000

d. 62,500
For the company of Mr. Hapal Moe, the average age of accounts receivable is 30 days, the
average age of accounts receivable is 50 days, and the age of inventory is 40 days. If Mr. Moe
annual sales is 90,000 what is the firm average accounts receivable balance. Assume a 360
day year

a. 100,000
b. 75,000
c. 125,000

d. 62,500
Cocoy company buys on terms 2/10, n/30. It does not take discounts, and it typically pays 60
days after the invoice date. Net purchase amount to 500,000 per year. What is the nominal
annual percentage cost of its non-free trade credit based on a 360 day year.

a. 36.73%
b. 24.48%
c. 36.00%
d. 24.00%

This is the effect of an increased accounts receivable on the current ratio and net working capital.
Select one:
a. no effect in current ratio and net working capital
b. increase in current ratio and net working capital
c. no effect in current ratio and increase in net working capital

d. increase in current ratio and no effect in net working capital