71. Notes receivable are reported at their net realizable value.
A. True
B. False
Ans: A
72. In determining an optimal credit extension policy, which of the following controllable variables should a company's financial manager consider?
a. Collection effort, credit standards, and multilateral netting.
b. Credit standards, credit terms, and collection effort.
c. Credit terms, credit standards, and inventory cycle.
d. Credit terms, credit standards, and lead time.
Ans: B
73. ________ are criteria a company uses to screen credit applicants in order to determine which of its customers should be offered credit and how much.
a. Carrying costs
b. Ordering costs
c. Credit standards
d. Stockout costs
Ans: C
74. The quality of credit extended to customers is a multidimensional concept involving which of the following?
a. Average collection period.
b. Bad-debt loss ratio.
c. a and b.
d. None of the above.
Ans: C
75. Which of the following is not a commonly used method to collect payments on past due accounts?
a. Sending notices.
b. Taking legal action.
c. Determining the applicant's credit worthiness.
d. Employing a collection agency.
Ans: C
76. Information for evaluating the creditworthiness of a customer is available form a variety of sources, including
a. banks.
b. credit reporting organizations.
c. financial statements submitted by the customer.
d. All of the above.
Ans: D
77. Which of the following is part of the five C's of capital?
a. Character, capital and conditions.
b. Capital, conditions, and cash discount.
c. Capital, collateral, and credit period.
d. None of the above.
Ans: A
78. Manufacturing firms generally hold three types of inventory:
a. raw material, stockout, and finished goods.
b. work-in-process, finished goods, and just-in-time inventory.
c. Just-in-time inventory, raw materials inventory, and finished goods inventory.
d. Raw materials, work-in-process, and finished goods inventories.
Ans: D
79. Which of the following is not an inventory related cost?
a. Ordering costs.
b. Variable costs.
c. Stockout prices.
d. Carrying costs.
Ans: B
80. The basic EOQ model makes a number of assumptions, including:
a. fluctuating demand.
b. uncertain lead times.
c. zero lead-time.
d. None of the above.
Ans: C
A. True
B. False
Ans: A
72. In determining an optimal credit extension policy, which of the following controllable variables should a company's financial manager consider?
a. Collection effort, credit standards, and multilateral netting.
b. Credit standards, credit terms, and collection effort.
c. Credit terms, credit standards, and inventory cycle.
d. Credit terms, credit standards, and lead time.
Ans: B
73. ________ are criteria a company uses to screen credit applicants in order to determine which of its customers should be offered credit and how much.
a. Carrying costs
b. Ordering costs
c. Credit standards
d. Stockout costs
Ans: C
74. The quality of credit extended to customers is a multidimensional concept involving which of the following?
a. Average collection period.
b. Bad-debt loss ratio.
c. a and b.
d. None of the above.
Ans: C
75. Which of the following is not a commonly used method to collect payments on past due accounts?
a. Sending notices.
b. Taking legal action.
c. Determining the applicant's credit worthiness.
d. Employing a collection agency.
Ans: C
76. Information for evaluating the creditworthiness of a customer is available form a variety of sources, including
a. banks.
b. credit reporting organizations.
c. financial statements submitted by the customer.
d. All of the above.
Ans: D
77. Which of the following is part of the five C's of capital?
a. Character, capital and conditions.
b. Capital, conditions, and cash discount.
c. Capital, collateral, and credit period.
d. None of the above.
Ans: A
78. Manufacturing firms generally hold three types of inventory:
a. raw material, stockout, and finished goods.
b. work-in-process, finished goods, and just-in-time inventory.
c. Just-in-time inventory, raw materials inventory, and finished goods inventory.
d. Raw materials, work-in-process, and finished goods inventories.
Ans: D
79. Which of the following is not an inventory related cost?
a. Ordering costs.
b. Variable costs.
c. Stockout prices.
d. Carrying costs.
Ans: B
80. The basic EOQ model makes a number of assumptions, including:
a. fluctuating demand.
b. uncertain lead times.
c. zero lead-time.
d. None of the above.
Ans: C
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