1. Accounts receivable (A/R) is one of a series of ________ transactions dealing with the billing of a customer for goods and services he/she has ordered.
A. Accountancy
B. Balance sheet
Ans: A
2: Companies can use their accounts receivable as collateral when obtaining a ________ (asset-based lending) or sell them through factoring.
A. Debt
B. Loan
C. Bond (finance)
D. Credit (finance)
Ans: B
3: In most business entities this is typically done by generating an ________ and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called "creditor payment terms."
A. Order (business)
B. Accounts payable
C. Invoice
D. Sales
Ans: C
4: Pools or portfolios of accounts receivable can be sold in the capital markets through a ________.
A. Securitization
B. Collateralized debt Obligation
C. Bond (finance)
D. Mortgage-backed security
Ans: A
5: The change in the bad debt provision from year to year is posted to the bad debt expense account in the ________.
A. Cash flow statement
B. Revenue
C. Income statement
D. General ledger
Ans: C
6: On a company's ________, accounts receivable is the money owed to that company by entities outside of the company.
A. Equity (finance)
B. Accountancy
C. Asset
D. Balance sheet
Ans: D
7: The two methods are not mutually exclusive, and some businesses will have a provision for doubtful debts and will also write off specific debts that they know to be bad (for example, if the debtor has gone into ________.)
A. Liquidator (law)
B. Unfair preference
C. Floating charge
D. Liquidation
Ans: D
8. A firm's inventory turnover (IT) is 5 times on a cost of goods sold (COGS) of $800,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact,
A. $160,000 is released.
B. $100,000 is additionally invested.
C. $60,000 is additionally invested.
D. $60,000 is released.
Ans: D
9. Ninety-percent of Vogel Bird Seed's total sales of $600,000 is on credit. If its year-end receivables turnover is 5, the average collection period (based on a 365-day year) and the year-end receivables are, respectively:
A. 365 days and $108,000.
B. 73 days and $120,000.
C. 73 days and $108,000.
D. 81 days and $108,000.
Ans: C
10. If EOQ = 360 units, order costs are $5 per order, and carrying costs are $.20 per unit, what is the usage in units?
A. 129,600 units
B. 2,592 units
C. 25,920 units
D. 18,720 units
Ans: B
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A. Accountancy
B. Balance sheet
Ans: A
2: Companies can use their accounts receivable as collateral when obtaining a ________ (asset-based lending) or sell them through factoring.
A. Debt
B. Loan
C. Bond (finance)
D. Credit (finance)
Ans: B
3: In most business entities this is typically done by generating an ________ and mailing or electronically delivering it to the customer, who in turn must pay it within an established timeframe called "creditor payment terms."
A. Order (business)
B. Accounts payable
C. Invoice
D. Sales
Ans: C
4: Pools or portfolios of accounts receivable can be sold in the capital markets through a ________.
A. Securitization
B. Collateralized debt Obligation
C. Bond (finance)
D. Mortgage-backed security
Ans: A
5: The change in the bad debt provision from year to year is posted to the bad debt expense account in the ________.
A. Cash flow statement
B. Revenue
C. Income statement
D. General ledger
Ans: C
6: On a company's ________, accounts receivable is the money owed to that company by entities outside of the company.
A. Equity (finance)
B. Accountancy
C. Asset
D. Balance sheet
Ans: D
7: The two methods are not mutually exclusive, and some businesses will have a provision for doubtful debts and will also write off specific debts that they know to be bad (for example, if the debtor has gone into ________.)
A. Liquidator (law)
B. Unfair preference
C. Floating charge
D. Liquidation
Ans: D
8. A firm's inventory turnover (IT) is 5 times on a cost of goods sold (COGS) of $800,000. If the IT is improved to 8 times while the COGS remains the same, a substantial amount of funds is released from or additionally invested in inventory. In fact,
A. $160,000 is released.
B. $100,000 is additionally invested.
C. $60,000 is additionally invested.
D. $60,000 is released.
Ans: D
9. Ninety-percent of Vogel Bird Seed's total sales of $600,000 is on credit. If its year-end receivables turnover is 5, the average collection period (based on a 365-day year) and the year-end receivables are, respectively:
A. 365 days and $108,000.
B. 73 days and $120,000.
C. 73 days and $108,000.
D. 81 days and $108,000.
Ans: C
10. If EOQ = 360 units, order costs are $5 per order, and carrying costs are $.20 per unit, what is the usage in units?
A. 129,600 units
B. 2,592 units
C. 25,920 units
D. 18,720 units
Ans: B
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