Page 1 1. (TCO 2) Select any actions that do not affect the cash account. Select
ID: 2669358 • Letter: P
Question
Page 1
1. (TCO 2) Select any actions that do not affect the cash account. Select all that apply: (Points : 3)
Goods are sold on credit
An interest payment on a notes payable is made
Raw materials are purchased and paid for with credit
A new machine is purchased and paid for with the business line of credit
2. (TCO 2) Which one of the following will increase the operating cycle? (Points : 3)
increasing the accounts payable period
decreasing the accounts payable turnover rate
decreasing the cash cycle
increasing the accounts receivable turnover rate
increasing the inventory period
3. (TCO 2) Assume Green Leaf Nursery anticipated sales of $500 in the first quarter. Accounts receivable at the beginning of the year was $300. Assuming a collection period of 30 days, which is the approximate beginning balance for the second quarter? (Points : 3)
$550
$630
$250
$170
None of the above
4. (TCO 2) Best Environment Engineering wrote a check and mailed it to the Electric Co. When the Electric Co. went to deposit the check, it discovered that the bank was closed due to flooding in the area. It was 5 days before the Electric Co. could deposit the check from Best Environment Engineering. Because the Electric Co.'s bank was closed: (Points : 3)
Best Environment's collection float decreased.
the Electric Co.'s collection float decreased.
Best Environment’s disbursement float increased.
the Electric Co.'s disbursements float increased.
the ledger balance of Best Environment was less than it would have been otherwise.
5. (TCO 2) Which of the following statements is true? Select all that apply: (Points : 3)
The optimal credit policy minimizes the total cost of granting credit.
There is an opportunity cost associated with not offering credit.
An increase in a firm's average collection period generally indicates that at least some customers are taking longer to pay.
The costs of the credit application process and the costs expended in the collection process are not carrying costs of granting credit.
Character refers to the ability of a firm to meet its credit obligations out its operating cash flows.
The optimal credit policy is the policy that produces the largest amount of sales for a firm.
6. (TCO 2) You place an order for 100 units of inventory Part A at a unit price of $522. The supplier offers terms of 1/25, net 40. How much should you remit if you take the discount? (Points : 3)
$52,200
$39,150
$51,678
None of the above
7. (TCO 2) Auto Parts sells 1,200 electric parts per week and then reorders another 1,200 parts. If the relevant carrying cost per electric part is $4 and the fixed order cost is $750, what is the total carrying cost and the restocking cost, respectively? (Points : 3)
$2,400 and $39,900
$3,200 and $33,800
$2,400 and $39,000
$3,400 and $30,000
None of the above
8. (TCO 2) Company ABC has expected sales of 12,000 units this year, an ordering cost of $6 per order and carrying costs of $1.60 per unit. What is the EOQ? (Points : 3)
310 units
300 units
150 units
155 units
None of the above
9. (TCO 2) The operating cycle begins when _____ and ends when_____. (Points : 3)
inventory is purchased; inventory is sold
inventory is purchased; payment is received for the sale of that inventory
inventory is purchased; the supplier of the inventory is paid
the sale of inventory occurs; payment is received for the sale of that inventory
the sale of inventory occurs; the supplier of the inventory is paid
10. (TCO 2) List three examples of short-term investments. (Points : 3)
Explanation / Answer
Page 1
1. (TCO 2) Select any actions that do not affect the cash account. Select all that apply: (Points : 3)
Goods are sold on credit
An interest payment on a notes payable is made
Raw materials are purchased and paid for with credit
A new machine is purchased and paid for with the business line of credit
2. (TCO 2) Which one of the following will increase the operating cycle? (Points : 3)
increasing the accounts payable period
decreasing the accounts payable turnover rate
decreasing the cash cycle
increasing the accounts receivable turnover rate
increasing the inventory period
3. (TCO 2) Assume Green Leaf Nursery anticipated sales of $500 in the first quarter. Accounts receivable at the beginning of the year was $300. Assuming a collection period of 30 days, which is the approximate beginning balance for the second quarter? (Points : 3)
$550
$630
$250
$170
None of the above
4. (TCO 2) Best Environment Engineering wrote a check and mailed it to the Electric Co. When the Electric Co. went to deposit the check, it discovered that the bank was closed due to flooding in the area. It was 5 days before the Electric Co. could deposit the check from Best Environment Engineering. Because the Electric Co.'s bank was closed: (Points : 3)
Best Environment's collection float decreased.
the Electric Co.'s collection float decreased.
Best Environment’s disbursement float increased.
the Electric Co.'s disbursements float increased.
the ledger balance of Best Environment was less than it would have been otherwise.
6. (TCO 2) You place an order for 100 units of inventory Part A at a unit price of $522. The supplier offers terms of 1/25, net 40. How much should you remit if you take the discount? (Points : 3)
$52,200
$39,150
$51,678
None of the above
7. (TCO 2) Auto Parts sells 1,200 electric parts per week and then reorders another 1,200 parts. If the relevant carrying cost per electric part is $4 and the fixed order cost is $750, what is the total carrying cost and the restocking cost, respectively? (Points : 3)
$2,400 and $39,900
$3,200 and $33,800
$2,400 and $39,000
$3,400 and $30,000
None of the above
8. (TCO 2) Company ABC has expected sales of 12,000 units this year, an ordering cost of $6 per order and carrying costs of $1.60 per unit. What is the EOQ? (Points : 3)
310 units
300 units
150 units
155 units
None of the above
9. (TCO 2) The operating cycle begins when _____ and ends when_____. (Points : 3)
inventory is purchased; inventory is sold
inventory is purchased; payment is received for the sale of that inventory
inventory is purchased; the supplier of the inventory is paid
the sale of inventory occurs; payment is received for the sale of that inventory
the sale of inventory occurs; the supplier of the inventory is paid
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