The period of time that extends from the day a credit sale is made until the day the bank credits a firm's account with the payment for that sale is known as the _____ period.. total sal
Trang 1Student: _
1 Blackwell Brothers sells men's suits The store offers a 1 percent discount if payment is received within
10 days Otherwise, payment is due within 30 days This credit offering is referred to as the:
3 Town Hardware sells goods on credit with payment due 30 days after purchase If payment is not
received by the 30th day, the store mails a friendly reminder to the customer If payment is not received
by the 45th day, the store calls the customer and requests payment and also stops offering credit to that customer These procedures are referred to as the store's:
A customer service policy
Trang 27 Any written proof that a customer owes you money for goods or services provided is referred to as a(n):
A opportunity cost curve
B credit extension curve
C credit cost curve
D terms of sale graph
E optimal sales graph
9 Assume that RSF is a wholly-owned subsidiary of the Rolled Steel Company RSF provides credit financing solely for large ticket items purchased from the Rolled Steel Company Which one of the following terms describes RSF?
10 The basic factors to be evaluated in the credit evaluation process, the five Cs of credit, are:
A conditions, control, cessation, capital, and capacity
B conditions, character, capital, control, and capacity
C capital, collateral, control, character, and capacity
D character, capacity, control, cessation, and collateral
E character, capacity, capital, collateral, and conditions
11 Roger's Home Appliances offers credit to customers it deems worthy of this privilege To determine if a customer is worthy, the firm computes a numerical value which is used to estimate the probability that the customer will default if credit is granted to them The process of computing this numerical value is referred to as:
#; Customer name; < 30 days; 31-60 days; 61-90 days; > 90 days You are to list every unpaid invoice
by customer name with the amount owed entered into the appropriate column for the number of days between the sale date and today Once you have completed that, you are to sort the report by customer name and then total the amounts listed in each column What is this report called?
Trang 313 Bill is in charge of the inventory for Home Builder's Supply As an inventory item gets low, he is
to restock the item by a quantity that minimizes the total inventory costs for that item What is this
restocking quantity called?
A short order quantity
B refill unit quantity
C economic order quantity
D minimum stock level
E re-order limit
14 Allison has developed a set of procedures for determining the amount of each raw material that she needs
to have in inventory if she is to keep her firm's assembly lines operating efficiently These procedures are commonly referred to by which one of the following terms?
A first-in, first-out method
B the Baumol model
C net working capital planning
D economic order procedures
E materials requirements planning
15 Which one of the following is a system for managing demand-dependent inventories that minimizes the inventory levels of a firm?
16 The terms of sale generally include which of the following?
I type of credit instrument
II cash discount
III credit period
IV discount period
A I and III only
B II and IV only
C III and IV only
D II, III, and IV only
E I, II, III, and IV
17 What is the primary purpose of credit analysis?
A determine the optimal credit period
B establish the effectiveness of granting a cash discount
C determine the optimal discount period, if any
D access the frequency and amount of sales by customer
E evaluate whether or not a customer will pay
18 The period of time that extends from the day a credit sale is made until the day the bank credits a firm's account with the payment for that sale is known as the _ period
19 Which one of the following will increase a firm's investment in accounts receivables?
A a decrease in the number of days for which credit is granted
B a decrease in credit sales
C an increase in cash sales
D a decrease in the average collection period
E an increase in average daily credit sales
Trang 420 A firm's total investment in receivables depends primarily on the firm's:
A total sales and cash discount period
B cash to credit sales ratio
C bad debt ratio
D average collection period and amount of credit sales
E amount of credit sales and cash discount percentage
21 Which one of the following time periods is included in the accounts receivable period but not in the cash collection period?
A the period of time between the receipt of a check and the availability of those funds
B time it takes a firm to process incoming receipts
C period of time a check is in the mail
D the amount of time that it takes a bank to credit a firm's account for a deposit made
E period of time it takes an invoice to reach a customer by mail
22 Which one of the following statements is correct if you purchase an item with credit terms of 1/5, net 15?
A If you pay within 1 day, you will receive a 5 percent discount
B If you pay within 5 days, you will receive a 1 percent discount
C If you do not pay within 15 days, you will be charged interest at a 1.5 percent monthly rate
D If you pay within 15 days, you will receive a 1/5th percent discount
E You must pay the discounted amount within 15 days
23 You are doing some comparison shopping Five stores offer the product you want at basically the same price Which one of the following stores offers the best credit terms if you plan on taking the discount?
25 Which one of the following statements is correct?
A The credit period begins when the discount period ends
B The discount period is the length of time granted to a customer to pay for a purchase
C The credit period begins on the invoice date
D With terms of 2/10, net 30, the net credit period is 20 days
E With EOM dating, all sales are assumed to have occurred on the 15th of each month
Trang 526 Which two of the following are the key considerations for a seller who is establishing the length of the credit period being offered to a customer?
I seller's operating cycle
II customer's operating cycle
III seller's inventory period
IV customer's inventory period
27 Which one of the following factors tends to favor longer credit periods?
A high consumer demand
B lower priced merchandise
C increased credit risk
D merchandise with low collateral value
E increased competition
28 Which one of the following statements is correct in regards to credit periods?
A Perishable items tend to have longer credit periods
B Items with low markups tend to have longer credit periods
C Smaller accounts tend to have longer credit periods
D Different customers may be offered different credit periods by the same firm
E Newer products tend to have shorter credit periods
29 A cash discount of 2/5, net 30:
A grants customers 30 days to pay after the discount period expires
B offers customers a maximum of 30 days credit
C grants free credit for a period of 30 days
D charges a higher price to a cash customer than to a customer who pays in 2 days
E grants customers 2 days to pay if they want the 5 percent discount
30 Under credit terms of 1/5, net 15, customers should:
A always pay on the 15th day
B take the 5 percent discount and pay immediately
C take the discount and pay on the day following the day of sale
D either take the discount or pay on the 15th day
E both take the discount and pay on the 15th day
31 A 2/10, net 30 credit policy:
A is an expensive form of short-term credit if a buyer foregoes the discount
B provides cheap financing to the buyer for 30 days
C is an inexpensive means of reducing the seller's collection period if every customer takes the discount
D tends to have little effect on the seller's collection period
E tends to increase a firm's investment in receivables as compared to a straight net 30 policy
32 The Green Hornet offers a trade discount with terms of 2/5, EOM Assume you purchase an item on credit from The Green Hornet on Monday, November 3 What is the invoice date for this purchase?
Trang 633 Which one of the following credit instruments is commonly used in international commerce?
34 A conditional sales contract:
A passes title to the goods sold to the buyer at the time the contract is signed
B normally calls for one lump sum payment on the contract payment date
C generally has a built-in interest cost
D is payable immediately upon receipt
E is a formal bid for a project
35 Which of the following statements correctly reflect the effects of granting credit to customers?
I Total revenues may increase if both the quantity sold and the price per unit increase when credit is granted
II A firm's cash cycle generally increases if credit is granted, all else equal
III Both the cost of default and the cost of discounts must be considered before granting credit
IV A firm may have to increase its long-term borrowing if it decides to grant credit to its customers
A I, II, and III only
B II, III, and IV only
C I, III, and IV only
D I, II, and IV only
E I, II, III, and IV
36 You are considering switching from an all cash credit policy to a net 30 credit policy You do not expect the switch to affect either your sales quantity or your sales price Ignoring interest and assuming that every month has 30 days, your net present value of the switch will be equal to:
A zero
B your selling price per unit
C your selling price per unit multiplied by -1
D your selling price per unit multiplied by -30
E your total monthly sales multiplied by -1
37 The optimal amount of credit equates the incremental costs of carrying the increase in accounts receivable
to the incremental:
A decrease in the cash cycle
B benefit from decreasing the inventory level
C cash flows from increased sales
D increase in bad debts
E gain in net profits
38 When credit policy is at the optimal point, the:
A total costs of granting credit will be maximized
B carrying costs of credit will be equal to zero
C opportunity cost of credit will be equal to zero
D carrying costs will equal the opportunity costs
E total costs will equal the opportunity costs
39 If you extend credit for a one-time sale to a new customer you risk an amount equal to:
A the sales price of the item sold
B the variable cost of the item sold
C the fixed cost of the item sold
D the profit margin on the item sold
E zero
Trang 740 Which one of the following statements is correct?
I payment history with similar firms
II credit reports
III financial statements
IV information provided by a bank
A I and III only
B II and IV only
C I and II only
D I, II, and III only
E I, II, III, and IV
42 When evaluating the creditworthiness of a customer, the term character refers to the:
A nature of the cash flows of the customer's business
B customer's financial resources
C types of assets the customer wants to pledge as collateral
D customer's willingness to pay bills in a timely fashion
E nature of the customer's line of work
43 Which one of the five Cs of credit refers to a firm's financial reserves?
45 Which one of the following statements is correct?
A An aging schedule helps identify those customers who are the most delinquent
B
The percentage of total receivables that falls within a certain time period on an aging schedule will remain constant over time even if the firm has seasonal sales
C Normally firms call their delinquent customers prior to sending them a past due letter
D A constant average collection period over a period of time is cause for concern
E.It is common practice when a customer files for bankruptcy to sell that customer's receivable at face value
Trang 846 Which one of the following inventory items is probably the least liquid?
A plywood held in inventory by a home builder
B a wheel barrow held in inventory by a garden center
C a partially assembled interior for a new vehicle
D a set of tires owned by an automobile manufacturer
E a toy owned by a retail toy store
47 Which one of the following inventory items is probably the most liquid?
A a custom made set of kitchen cabinets
B metal cabinets for dishwashers
C wheat stored in a grain silo
D a customized drilling press
E a partially built modular home
48 Which one of the following inventory-related costs is considered a shortage cost?
A storage costs
B insurance cost
C cost of safety reserves
D obsolescence cost
E opportunity cost of capital used for inventory purchases
49 The ABC approach to inventory management is based on the concept that:
A inventory should arrive just in time to be used
B the inventory period should be constant for all inventory items
C.basic inventory items that are essential to production and also inexpensive should be ordered in small quantities only
D a small percentage of the inventory items probably represents a large percentage of the inventory cost
E.one-third of a year's inventory need should be on hand, another third should be on order, and the last third should not be ordered yet
50 The EOQ model is designed to determine how much:
A total inventory a firm needs in any one year
B total inventory costs will be for any one given year
C inventory should be purchased at a time
D inventory will be sold per day
E a firm loses in sales per day when an inventory item is depleted
51 At the optimal order quantity size, the:
A total cost of holding inventory is fully offset by the restocking costs
B carrying costs are equal to zero
C restocking costs are equal to zero
D total costs equal the carrying costs
E carrying costs equal the restocking costs
52 The EOQ model is designed to minimize:
A production costs
B inventory obsolescence
C the carrying costs of inventory
D the costs of replenishing inventory
E the total costs of holding inventory
53 Which one of the following items is most likely a derived-demand inventory item?
A cereal ready to be bagged and shipped to stores
B tires held in inventory by an auto maker
C shoes on display in a retail store
D toys ready to be shipped to toy stores
E wheat harvested by a farmer
Trang 954 Inventory needs under a derived-demand inventory system are:
A primarily dependent upon the competitive demands placed on a firm's suppliers
B based on the anticipated demand for the finished product
C based on minimizing the cost of restocking inventory
D held constant over time
E determined by a kanban system
55 A just-in-time inventory system:
I when implemented properly reduces the cost of inventory to zero
II increases the inventory turnover rate
III is sufficient to handle immediate production needs
IV minimizes the costs of holding inventory
A I and III only
B II and IV only
C I, II, and IV only
D II, III, and IV only
E I, II, III, and IV
56 The incremental investment in receivables under the accounts receivable approach is equal to:
57 The accounts receivable approach to credit policy supports the theory that:
A a firm's risk of offering credit to a new customer is limited to the variable cost of the sold items
B the best credit policy is an all-cash policy
C.the cost of offering credit to a new customer is the same as the cost of offering credit to an existing customer
D foregoing cash discounts is a method of obtaining inexpensive short-term financing
E.the default risk of a credit policy is the same as the default risk under an all cash-policy if your
customers remain the same
58 Which two of the following are the key elements in determining whether or not a switch from a no-credit policy to a credit policy is advisable?
I variable cost per unit
II cash discount percentage
III credit price
IV default rate
A I and III only
B II and IV only
C II and III only
D I and IV only
E III and IV only
59 On average, your firm sells $38,700 of items on credit each day The firm's average operating cycle is
49 days and it acquires and sells inventory, on average, every 17 days What is the average accounts receivable balance?
Trang 1060 The Winter Store just purchased $48,300 of goods from its supplier with credit terms of 1/10, net 25 What is the discounted price?
62 A supplier grants your firm credit terms of 2/10, net 40 What is the effective annual rate of the discount
if the firm purchases $4,600 worth of merchandise?