BUSN 379 Week 7 MCQs

1. Select any actions that increase the cash account. Select all that apply:A. payment is received on a receivedB. An interest payment on a notes payable is madeC. A payment due is received from a clientD. An old machine is sold for cash2. Which one of the following actions will decrease the operating cycle?A. eliminating all inventory items that are slow sellersB. delaying payments to suppliersC. paying suppliers fasterD. increasing the amount of inventory on the shelvesE. granting customers more time to pay for their credit purchases3. 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?A. $550B. 530C. 250D. 170E. None of the Above4. 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:A. Best Environment’s collection float decreased.B. the Electric Co.’s collection float decreased.C. Best Environment’s disbursement float increased.D. the Electric Co.’s disbursements float increased.E. the ledger balance of Best Environment was less than it would have been otherwise.5. Which of the following statements is true? Select all that apply:A. The optimal credit policy minimizes the total cost of granting credit.B. Firms should avoid offering credit at all cost.C. An increase in a firm’s average collection period generally indicates that an increased number of customers are taking advantage of the cash discount.D. The costs of the credit application process and the costs expended in the collection process are carrying costs of granting credit.E. Capacity refers to the ability of a firm to meet its credit obligations out its operating cash flows.F. The optimal credit policy is the policy that produces the largest amount of sales for a firm.6. 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?A. $52,200B. $39,150C. $51,678D. None of the above7. Auto Parts sells 1,600 electric parts per week and then reorders another 1,600 parts. If the relevant carrying cost per electric part is $4 and the fixed order cost is $650, what is the total carrying cost and the restocking cost, respectively?A. $6,400 and $33,800B. $3,200 and $33,800C. $6,400 and $7,800D. $6,400 and $33,000E. None of the above8. 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 average inventory?A. 310 unitsB. 300 unitsC. 150 unitsD. 155 unitsE. None of the above9. The operating cycle begins when _____ and ends when_____.A. inventory is purchased; inventory is soldB. inventory is purchased; payment is received for the sale of that inventoryC. inventory is purchased; the supplier of the inventory is paidD. the sale of inventory occurs; payment is received for the sale of that inventoryE. the sale of inventory occurs; the supplier of the inventory is paid