Question

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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 ofcredit

2. (TCO 2) Which one of the following will increase the operatingcycle? (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 inthe first quarter. Accounts receivable at the beginning of the yearwas $300. Assuming a collection period of 30 days, which is theapproximate 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 itto the Electric Co. When the Electric Co. went to deposit thecheck, it discovered that the bank was closed due to flooding inthe area. It was 5 days before the Electric Co. could deposit thecheck from Best Environment Engineering. Because the Electric Co.'sbank 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 havebeen otherwise.

5. (TCO 2) Which of the following statements is true? Select allthat apply: (Points : 3)
The optimal credit policy minimizes the total cost of grantingcredit.

There is an opportunity cost associated with not offeringcredit.

An increase in a firm's average collection period generallyindicates that at least some customers are taking longer topay.

The costs of the credit application process and the costs expendedin the collection process are not carrying costs of grantingcredit.

Character refers to the ability of a firm to meet its creditobligations out its operating cash flows.

The optimal credit policy is the policy that produces the largestamount of sales for a firm.


6. (TCO 2) You place an order for 100 units of inventory Part A ata 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 thenreorders another 1,200 parts. If the relevant carrying cost perelectric part is $4 and the fixed order cost is $750, what is thetotal 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 thisyear, an ordering cost of $6 per order and carrying costs of $1.60per 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 endswhen_____. (Points : 3)
inventory is purchased; inventory is sold
inventory is purchased; payment is received for the sale of thatinventory
inventory is purchased; the supplier of the inventory is paid
the sale of inventory occurs; payment is received for the sale ofthat inventory
the sale of inventory occurs; the supplier of the inventory ispaid

10. (TCO 2) List three examples of short-term investments. (Points: 3)