Question 1

How are checks that are deposited into a typical lockbox handled?

Accepted Answer

A)  The checks are deposited into a local bank which then overnights one check for the entire amount to the firm.
B)  The checks are collected once a day, normally in the early morning, by a bank employee.
C)  The checks are posted to the customer's account prior to being deposited.
D)  The checks are collected throughout the day and immediately deposited into the firm's account.
E)  The checks are collected and sent overnight to the firm's main office for processing.F) A) and D)
G) A) and C)

Question 2

The economic order quantity approach states that inventory order sizes should be determined in which one of the following manners?

Accepted Answer

A)  By dividing annual item sales by the carrying cost per item and multiplying by 2
B)  By computing the average number of items sold each month
C)  By equating restocking costs with carrying costs
D)  By dividing the inventory into various groups based on the value per item
E)  By computing the amount of the derived demandF) A) and C)
G) B) and D)

Question 3

Electronics and More offers credit terms of 1/5,net 20.What is the effective annual rate on a $12,000 purchase if you forgo the discount?

Accepted Answer

A)  0 percent
B)  8.59 percent
C)  14.99 percent
D)  27.71 percent
E)  32.58 percentF) A) and D)
G) A) and E)

Question 4

On any given day,Athens Florist receives numerous checks worth an average combined total of $6,300.The funds from the deposited checks are generally available in 1.5 days.Every day the firm mails out checks totaling $4,600 that generally take 2 days to clear the bank.What is the amount of the disbursement float?

Accepted Answer

A)  $150
B)  $6,900
C)  $9,150
D)  $9,200
E)  $9,850F) C) and D)
G) A) and D)

Question 5

Which one of the following would tend to create an unexpected increase in a firm's average collection period?

Accepted Answer

A)  Increased credit sales
B)  The implementation of a cash discount
C)  Increased customer delinquencies
D)  Increased dollar value per each sale
E)  Increased collection effortsF) B) and C)
G) A) and D)

Question 6

You place an order for 680 units of widgets at a unit price of $46.The supplier offers terms of 2/5,net 20.If you don't take the discount,how much interest are you paying implicitly?

Accepted Answer

A)  $46
B)  $625.60
C)  $792.00
D)  $1,460
E)  $1,564F) B) and D)
G) A) and E)

Question 7

Which one of the following is a system for managing demand-dependent inventories that minimizes the amount of inventory on hand?

Accepted Answer

A)  Inventory flow log
B)  Materials requirements planning
C)  Just-in-time inventory system
D)  Kanban
E)  KeiretsuF) B) and D)
G) A) and D)

Question 8

Lockboxes should be located:

Accepted Answer

A)  in every town where a firm has a customer.
B)  based on where a firm's primary customers are located.
C)  only in major urban areas since those are the key financial areas of the country.
D)  close to a firm's home office.
E)  only in cities where the firm has regional offices.F) B) and E)
G) A) and D)

Question 9

On any given day,a firm receives numerous checks worth an average combined total of $5,900.The funds from the deposited checks are generally available after two days.Every day,the firm mails out checks totaling $4,400 that generally take three days to clear the bank.What is the amount of the collection float?

Accepted Answer

A)  $4,400
B)  $5,900
C)  $11,800
D)  $13,250
E)  $13,400F) None of the above
G) A) and D)

Question 10

Which one of the following will tend to decrease the length of the credit period?

Accepted Answer

A)  Decrease in default risk
B)  Increase in the cost of the product
C)  Increase in competition
D)  Decrease in the size of the account
E)  Decrease in turnover rateF) A) and E)
G) B) and D)

Question 11

Which one of the following is evidence of indebtedness?

Accepted Answer

A)  Terms of sale
B)  Credit cost curve
C)  Credit instrument
D)  Concentration policy
E)  Credit policyF) A) and B)
G) A) and C)

Question 12

How quickly can a bank receive payment once it transmits a copy of a check to the bank on which the check was drawn?

Accepted Answer

A)  Immediately
B)  In one day
C)  Between one and two days
D)  In two days
E)  Between two and three daysF) A) and C)
G) A) and D)

Question 13

Which one of the following will tend to increase the length of the credit period?

Accepted Answer

A)  Decrease in product cost
B)  Decrease in consumer demand
C)  Decrease in collateral value
D)  Increase in credit risk
E)  Increase in product standardizationF) A) and E)
G) A) and D)

Question 14

To minimize collection float,a firm should do which of the following?
I.Deposit its collections at least daily
II.Make sure all checks it receives at the sales counter are properly dated and signed
III.Pay its bills in a more timely manner
IV.Eliminate its regional lockboxes and have only one central lockbox located near the firm's home office

Accepted Answer

A)  I and II only
B)  III and IV only
C)  II, III, and IV only
D)  I, II, and III only
E)  I, II, III, and IVF) B) and E)
G) C) and E)

Question 15

In a typical month,River City Tours received 60 checks totaling $144,000.These are delayed 3 days on average.What is the average daily float? Assume 30 days in a month.

Accepted Answer

A)  $12,500
B)  $13,333
C)  $14,400
D)  $16,217
E)  $16,667F) A) and B)
G) A) and C)

Question 16

Which one of the following best defines the economic order quantity (EOQ) ?

Accepted Answer

A)  Minimum size of an order needed to qualify for free shipping
B)  Minimum amount that must be ordered to obtain the quantity discount
C)  Number of items that are sold on average each month
D)  Restocking quantity that minimizes the total cost of inventory
E)  Minimal amount of inventory that must be purchased to receive a cash discountF) A) and E)
G) B) and D)

Question 17

Which of the following will tend to increase the credit period?
I.Increase in the buyer's inventory period
II.Decrease in the buyer's inventory period
III.Increase in the buyer's operating cycle
IV.Decrease in the buyer's operating cycle

Accepted Answer

A)  I and III only
B)  I and IV only
C)  II and III only
D)  II and IV only
E)  II onlyF) B) and D)
G) B) and C)

Question 18

Which one of the following will reduce the disbursement float of a firm?

Accepted Answer

A)  Mailing a check from a very remote location
B)  Mailing an unsigned check so that it must be returned for a signature
C)  Paying a loan payment at the bank rather than mailing a check to the bank
D)  Requiring that all checks be held one day before mailing so they can be reviewed by a manager
E)  Writing checks on a zero-balance account rather than on the master accountF) B) and C)
G) All of the above

Question 19

Check kiting has been a means,although neither an ethical nor legal means,of allowing a firm to use its uncollected cash.How did the Check Clearing Act for the 21st Century (Check 21)affect this practice?

Accepted Answer

Kiting is the writing of checks on a fir...

Question 20

Which one of the following is the best example of a raw material?

Accepted Answer

A)  Set of tires for an automaker
B)  Partially assembled airplane
C)  Cabinets ready to be shipped
D)  Can of paint waiting to be sold
E)  Cell phone waiting to be encasedF) C) and D)
G) All of the above

Exam 17: Working Capital Management

How are checks that are deposited into a typical lockbox handled?

Correct Answer
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Correct Answer
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Correct Answer
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Which one of the following will tend to decrease the length of the credit period?

Correct Answer
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Which one of the following is a system for managing demand-dependent inventories that minimizes the amount of inventory on hand?

Correct Answer
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Which of the following will tend to increase the credit period? I.Increase in the buyer's inventory period II.Decrease in the buyer's inventory period III.Increase in the buyer's operating cycle IV.Decrease in the buyer's operating cycle

Correct Answer
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You place an order for 680 units of widgets at a unit price of $46.The supplier offers terms of 2/5,net 20.If you don't take the discount,how much interest are you paying implicitly?

Correct Answer
verified

In a typical month,River City Tours received 60 checks totaling $144,000.These are delayed 3 days on average.What is the average daily float? Assume 30 days in a month.

Correct Answer
verified

Which one of the following is the best example of a raw material?

Correct Answer
verified

How quickly can a bank receive payment once it transmits a copy of a check to the bank on which the check was drawn?

Correct Answer
verified

Which one of the following best defines the economic order quantity (EOQ) ?

Correct Answer
verified

Electronics and More offers credit terms of 1/5,net 20.What is the effective annual rate on a $12,000 purchase if you forgo the discount?

Correct Answer
verified

The economic order quantity approach states that inventory order sizes should be determined in which one of the following manners?

Correct Answer
verified

Check kiting has been a means,although neither an ethical nor legal means,of allowing a firm to use its uncollected cash.How did the Check Clearing Act for the 21^st Century (Check 21)affect this practice?

Correct Answer
verified
Kiting is the writing of checks on a fir...
View Answer

Lockboxes should be located:

Correct Answer
verified

Which one of the following will tend to increase the length of the credit period?

Correct Answer
verified

Which one of the following would tend to create an unexpected increase in a firm's average collection period?

Correct Answer
verified

Which one of the following will reduce the disbursement float of a firm?

Correct Answer
verified

Correct Answer
verified

Which one of the following is evidence of indebtedness?

Correct Answer
verified

Exam 17: Working Capital Management

How are checks that are deposited into a typical lockbox handled?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following will tend to decrease the length of the credit period?

Correct AnswerverifiedShow Answer

Which one of the following is a system for managing demand-dependent inventories that minimizes the amount of inventory on hand?

Correct AnswerverifiedShow Answer

Which of the following will tend to increase the credit period? I.Increase in the buyer's inventory period II.Decrease in the buyer's inventory period III.Increase in the buyer's operating cycle IV.Decrease in the buyer's operating cycle

Correct AnswerverifiedShow Answer

You place an order for 680 units of widgets at a unit price of $46.The supplier offers terms of 2/5,net 20.If you don't take the discount,how much interest are you paying implicitly?

Correct AnswerverifiedShow Answer

In a typical month,River City Tours received 60 checks totaling $144,000.These are delayed 3 days on average.What is the average daily float? Assume 30 days in a month.

Correct AnswerverifiedShow Answer

Which one of the following is the best example of a raw material?

Correct AnswerverifiedShow Answer

How quickly can a bank receive payment once it transmits a copy of a check to the bank on which the check was drawn?

Correct AnswerverifiedShow Answer

Which one of the following best defines the economic order quantity (EOQ) ?

Correct AnswerverifiedShow Answer

Electronics and More offers credit terms of 1/5,net 20.What is the effective annual rate on a $12,000 purchase if you forgo the discount?

Correct AnswerverifiedShow Answer

The economic order quantity approach states that inventory order sizes should be determined in which one of the following manners?

Correct AnswerverifiedShow Answer

Check kiting has been a means,although neither an ethical nor legal means,of allowing a firm to use its uncollected cash.How did the Check Clearing Act for the 21st Century (Check 21)affect this practice?

Correct AnswerverifiedKiting is the writing of checks on a fir...View AnswerShow Answer

Lockboxes should be located:

Correct AnswerverifiedShow Answer

Which one of the following will tend to increase the length of the credit period?

Correct AnswerverifiedShow Answer

Which one of the following would tend to create an unexpected increase in a firm's average collection period?

Correct AnswerverifiedShow Answer

Which one of the following will reduce the disbursement float of a firm?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which one of the following is evidence of indebtedness?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Check kiting has been a means,although neither an ethical nor legal means,of allowing a firm to use its uncollected cash.How did the Check Clearing Act for the 21^st Century (Check 21)affect this practice?

Correct Answer
verified
Kiting is the writing of checks on a fir...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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