Question 1

Ruby Red has an average collection period of 31 days. Its average daily investment in receivables is $74,800. What are annual credit sales?

Accepted Answer

A)   $727,272
B)   $880,710
C)   $914,414
D)   $1,604,200
E)   $1,707,500F) B) and D)
G) B) and C)

Question 2

Coastal Gifts has an average collection period of 18 days and annual sales of $694,000. What is the average investment in accounts receivables as shown on the balance sheet?

Accepted Answer

A)   $18,850
B)   $20,375
C)   $21,506
D)   $28,700
E)   $34,225F) A) and B)
G) A) and D)

Question 3

As of this morning, your firm had a ledger balance of $740 with no outstanding deposits or checks. Today, your firm deposited 5 checks in the amount of $89 each and wrote a check in the amount of $330. What is the amount of the collection float as of the end of the day?

Accepted Answer

A)   $115
B)   $240
C)   $330
D)   $445
E)   $775F) A) and E)
G) A) and D)

Question 4

Laurie's Ice Rink keeps an extra $1,500 in its checking account simply in case an emergency arises. Which type of motive for holding cash does this represent?

Accepted Answer

A)   Speculative
B)   Float requirement
C)   Transaction
D)   Precautionary
E)   AvailabilityF) B) and C)
G) A) and D)

Question 5

Which one of the following is the bill given to a customer for goods he or she purchased?

Accepted Answer

A)   Account aging
B)   Invoice
C)   Docket
D)   Remittance advice
E)   Shipping receiptF) A) and B)
G) C) and D)

Question 6

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

Accepted Answer

A)   Lockbox account
B)   Cash concentration account
C)   Ledger account
D)   Zero-balance account
E)   Cash clearing accountF) A) and E)
G) C) and E)

Question 7

Brewster's writes 145 checks a day for an average amount of $211 each. These checks generally clear the bank 3.5 days after they are written. In addition, the firm generally receives an average of $48,700 a day in checks. The checks that are received are deposited immediately and the funds are generally available the following day. What is the amount of the firm's disbursement float?

Accepted Answer

A)   $104,625.00
B)   $107,082.50
C)   $155,255.50
D)   $170,450.00
E)   $48,700.00F) C) and D)
G) B) and D)

Question 8

Which one of the following is a disbursement account into which funds are transferred only as needed to cover the demands for payment?

Accepted Answer

A)   Master account
B)   Controlled disbursement account
C)   Bank controlled account
D)   Investment account
E)   Safety stock accountF) A) and B)
G) A) and E)

Question 9

Which one of the following is the graphical representation of the sum of the carrying costs and the opportunity costs of a credit policy?

Accepted Answer

A)   Accounts receivables aging
B)   Economic credit function
C)   Optimal credit curve
D)   Credit analysis
E)   Credit cost curveF) B) and E)
G) C) and D)

Question 10

Which one of the following refers to a customer's willingness to meet his or her credit obligations?

Accepted Answer

A)   Capital
B)   Conditions
C)   Capacity
D)   Character
E)   CollateralF) None of the above
G) A) and E)

Question 11

Charlie's Bar writes 3 checks a day for an average amount of $5,400 each. These checks generally clear the bank 4 days after they are written. In addition, the firm generally receives and deposits checks amounting to $18,700 each day. All deposits are available on the next day. What is the firm's net float?

Accepted Answer

A)   Net collection float of $13,200
B)   Net collection float of $18,700
C)   Net collection float of $22,300
D)   Net disbursement float of $46,100
E)   Net disbursement float of $64,800F) None of the above
G) C) and E)

Exam 17: Working Capital Management

Ruby Red has an average collection period of 31 days. Its average daily investment in receivables is $74,800. What are annual credit sales?

Correct Answer
verified

Which one of the following is a disbursement account into which funds are transferred only as needed to cover the demands for payment?

Correct Answer
verified

Correct Answer
verified

Which one of the following refers to a customer's willingness to meet his or her credit obligations?

Correct Answer
verified

Which one of the following is the bill given to a customer for goods he or she purchased?

Correct Answer
verified

As of this morning, your firm had a ledger balance of $740 with no outstanding deposits or checks. Today, your firm deposited 5 checks in the amount of $89 each and wrote a check in the amount of $330. What is the amount of the collection float as of the end of the day?

Correct Answer
verified

Correct Answer
verified

Coastal Gifts has an average collection period of 18 days and annual sales of $694,000. What is the average investment in accounts receivables as shown on the balance sheet?

Correct Answer
verified

Laurie's Ice Rink keeps an extra $1,500 in its checking account simply in case an emergency arises. Which type of motive for holding cash does this represent?

Correct Answer
verified

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

Correct Answer
verified

Which one of the following is the graphical representation of the sum of the carrying costs and the opportunity costs of a credit policy?

Correct Answer
verified

Exam 17: Working Capital Management

Ruby Red has an average collection period of 31 days. Its average daily investment in receivables is $74,800. What are annual credit sales?

Correct AnswerverifiedShow Answer

Which one of the following is a disbursement account into which funds are transferred only as needed to cover the demands for payment?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following refers to a customer's willingness to meet his or her credit obligations?

Correct AnswerverifiedShow Answer

Which one of the following is the bill given to a customer for goods he or she purchased?

Correct AnswerverifiedShow Answer

As of this morning, your firm had a ledger balance of $740 with no outstanding deposits or checks. Today, your firm deposited 5 checks in the amount of $89 each and wrote a check in the amount of $330. What is the amount of the collection float as of the end of the day?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Coastal Gifts has an average collection period of 18 days and annual sales of $694,000. What is the average investment in accounts receivables as shown on the balance sheet?

Correct AnswerverifiedShow Answer

Laurie's Ice Rink keeps an extra $1,500 in its checking account simply in case an emergency arises. Which type of motive for holding cash does this represent?

Correct AnswerverifiedShow Answer

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

Correct AnswerverifiedShow Answer

Which one of the following is the graphical representation of the sum of the carrying costs and the opportunity costs of a credit policy?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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