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Financial Accounting A Critical Approach CANADIAN Canadian 4th Edition John Friedlan Test Bank 1
Financial Accounting A Critical Approach CANADIAN Canadian 4th Edition John Friedlan Test Bank 1
05
Student: ___________________________________________________________________________
3. Which of the following would cause net income to be higher than cash flow from operations?
A. Store staff worked the last week of the year until December 31, but will not be paid until January 15.
B. The company amortizes intangible assets over their useful lives.
C. The company made sales to customers on credit that will be paid in the next fiscal period.
D. The company purchased new display shelves for the store.
4. Which of the following would cause net income to be lower than cash flow from operations?
A. Store staff worked the last week of the year until December 31, but will not be paid until January 15.
B. The company bought and paid for a two-year insurance policy.
C. The company made sales to customers on credit that will be paid for in the next fiscal period.
D. On December 31st, the company purchased new display shelves for the store.
5. On average a company has goods on hand for 120 days before they sell them. They buy their goods on credit
with 30-day terms and they sell their goods by offering 20 days to pay. What is their inventory conversion
period?
A. 90 days
B. 110 days
C. 120 days
D. 140 days
6. On average a company has goods on hand for 120 days before they sell them. They buy their goods on credit
with 30-day terms and they sell their goods by offering 20 days to pay. What is their inventory self-financing
period?
A. 90 days
B. 110 days
C. 120 days
D. 140 days
7. On average a company has goods on hand for 120 days before they sell them. They buy their goods on credit
with 30-day terms and they sell their goods by offering 20 days to pay. What is their payables deferral period?
A. 30 days
B. 90 days
C. 110 days
D. 120 days
8. On average a company has goods on hand for 120 days before they sell them. They buy their goods on credit
with 30-day terms and they sell their goods by offering 20 days to pay. What is their receivables conversion
period?
A. 20 days
B. 30 days
C. 90 days
D. 140 days
9. On average a company has goods on hand for 120 days before they sell them. They buy their goods on credit
with 30-day terms and they sell their goods by offering 20 days to pay. How many days are there between
receiving the inventory from suppliers and receiving cash from customers?
A. 90 days
B. 110 days
C. 120 days
D. 140 days
10. Norquay Inc. manufactures computers. The company tries to minimize the amount of inventory it must
carry and therefore only purchases required components after a customer order is received. The computers are
usually completed within two days of the customer order and then shipped to the customer on the fourth day
following the purchase of materials. Supplier's terms dictate that all purchases must be paid for within 30 days.
Norquay offers a deferred financing plan to all of its customers that allow them a 60-day period of no payments
or interest. Most of the customers pay their entire balance on the 60th day following delivery of the computer.
What is Norquay's payable deferral period?
A. 2 days
B. 4 days
C. 30 days
D. 60 days
11. Norquay Inc. manufactures computers. The company tries to minimize the amount of inventory it must
carry and therefore only purchases required components after a customer order is received. The computers are
usually completed within two days of the customer order and then shipped to the customer on the fourth day
following the purchase of materials. Supplier's terms dictate that all purchases must be paid for within 30 days.
Norquay offers a deferred financing plan to all of its customers that allow them a 60-day period of no payments
or interest. Most of the customers pay their entire balance on the 60th day following delivery of the computer.
What is Norquay's inventory self-financing period?
A. 2 days
B. 4 days
C. 30 days
D. 34 days
12. Norquay Inc. manufactures computers. The company tries to minimize the amount of inventory it must
carry and therefore only purchases required components after a customer order is received. The computers are
usually completed within two days of the customer order and then shipped to the customer on the fourth day
following the purchase of materials. Supplier's terms dictate that all purchases must be paid for within 30 days.
Norquay offers a deferred financing plan to all of its customers that allow them a 60-day period of no payments
or interest. Most of the customers pay their entire balance on the 60th day following delivery of the computer.
What is Norquay's inventory conversion period?
A. 2 days
B. 4 days
C. 30 days
D. 60 days
13. Norquay Inc. manufactures computers. The company tries to minimize the amount of inventory it must
carry and therefore only purchases required components after a customer order is received. The computers are
usually completed within two days of the customer order and then shipped to the customer on the fourth day
following the purchase of materials. Supplier's terms dictate that all purchases must be paid for within 30 days.
Norquay offers a deferred financing plan to all of its customers that allow them a 60-day period of no payments
or interest. Most of the customers pay their entire balance on the 60th day following delivery of the computer.
How many days are there between receiving the inventory from suppliers and receiving cash for the company?
A. 2 days
B. 4 days
C. 26 days
D. 64 days
14. Which of the following best describes the inventory self-financing period for a company?
A. The time between when goods arrive at the company and when they are sold.
B. The time between when goods arrive at the company and when the cash is collected from their sale.
C. The time between when goods are paid for and when they are sold.
D. The time between when good are paid for and when the cash is collected from their sale.
15. Which of the following best describes the inventory conversion period for a company?
A. The time between when goods arrive at the company and when they are sold.
B. The time between when goods arrive at the company and when the cash is collected from their sale.
C. The time between when goods are paid for and when they are sold.
D. The time between when good are paid for and when the cash is collected from their sale.
16. Which of the following best describes the payable deferral period for a company?
A. The time between when goods arrive at the company and when they are sold.
B. The time between when goods arrive at the company and when they are paid to the supplier.
C. The time between when goods are paid for and when they are sold.
D. The time between when good are paid for and when the cash is collected from their sale.
17. Which of the following best describes the receivables conversion period for a company?
A. The time between when goods arrive at the company and when they are sold.
B. The time between when goods arrive at the company and when the cash is collected from their sale.
C. The time between when goods are paid for and when they are sold.
D. The time between when good are sold and when the cash is collected from their sale.
18. If a company is experiencing cash shortages, which of the following would help to resolve the problem of
cash shortages?
A. If they increase the inventory conversion period.
B. If they increase the payables deferral period.
C. If they increase the inventory self-financing period.
D. If they increase the receivables conversion period.
19. If a company is experiencing cash shortages, which of the following would help to resolve the problem of
cash shortages?
A. If they decrease the inventory conversion period.
B. If they decrease the payables deferral period.
C. If they increase the inventory self-financing period.
D. If they increase the receivables conversion period.
20. If a company is experiencing cash shortages, which of the following would help to resolve the problem of
cash shortages?
A. If they increase the inventory conversion period.
B. If they decrease the payables deferral period.
C. If they increase the inventory self-financing period.
D. If they decrease the receivables conversion period.
21. If a company is experiencing cash shortages, which of the following would help to resolve the problem of
cash shortages?
A. If they increase the inventory conversion period.
B. If they decrease the payables deferral period.
C. If they decrease the inventory self-financing period.
D. If they increase the receivables conversion period.
22. What do you call the cycle by which an entity begins with cash, invests in resources, provides good to
customers and then collects the cash from customers?
A. The cash cycle
B. The operating cycle
C. The business cycle
D. The accounting cycle
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