Question 1

Which one of the following inventory management approaches determines the finished goods inventory level and then works backwards until the raw material needs are determined?

Accepted Answer

A)   Extended EOQ
B)   Just-in-time
C)   ABC approach
D)   Materials requirement planning
E)   Economic order quantityF) A) and B)
G) All of the above

Question 2

Stewart's Office Supply has revised its office procedures such that it now takes 1 day to prepare the daily deposit, rather than 2 days. Accounts payables are processed in 5 days, rather than the previous 4 days, so that shipping and receiving can better verify the charges before the checks are written. How will these revised procedures affect the firm's float?

Accepted Answer

A)   Increase the disbursement float by 1 day
B)   Decrease the collection float by 1 day
C)   Decrease the net float by 2 days
D)   Increase the net float by 2 days
E)   No effect on the firm's floatF) A) and D)
G) C) and D)

Question 3

Which one of the following defines the terms of sale?

Accepted Answer

A)   Period of time during which a discount can be taken on an invoice
B)   Period of time granted to a customer to pay for the goods or services received
C)   Legal documents related to the credit sale of either goods or services
D)   Conditions under which a firm sells its goods or services for either cash or credit
E)   Process used to determine which customers shall be granted credit and which shall notF) B) and D)
G) B) and E)

Question 4

A firm's float management policy is most apt to include which one of the following statements?

Accepted Answer

A)   All invoices are to be paid the same day they are received.
B)   All outgoing checks are to be delivered by the fastest means possible.
C)   The depository bank needs to process all deposits in accordance with the Check Clearing Act for the  Century.
D)   Any check received is to be held until the customer's account has been updated to record the payment.
E)   Accounts payables processing should be given priority over accounts receivables processing.F) D) and E)
G) B) and D)

Question 5

Which one of the following best illustrates the concept of derived demand?

Accepted Answer

A)   A minimum wage worker tends to buy more off brand products than do more highly-paid professionals
B)   A windshield company has to step up production because auto sales are increasing
C)   A grocery store is selling more fresh fruits and vegetables because people are improving their diets
D)   Restaurant sales are rising because unemployment is falling
E)   Retail stores have higher sales around the holiday season than in other seasons of the yearF) All of the above
G) B) and C)

Question 6

Which one of the following is a special post office mailbox that is used to speed up the collection of accounts receivable payments?

Accepted Answer

A)   Separation box
B)   Cash box
C)   Concentration account
D)   Lockbox
E)   Float boxF) B) and E)
G) None of the above

Question 7

Kate's Korner Market monitors 3 percent of its inventory on a daily basis, another 20 percent on a weekly basis, and the remaining inventory on a quarterly basis. What inventory management approach is being used?

Accepted Answer

A)   ABC
B)   EOQ
C)   MRP
D)   Q*
E)   JITF) A) and B)
G) C) and E)

Question 8

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) A) and E)
G) A) and D)

Question 9

Which one of the following is a speculative motive for holding cash?

Accepted Answer

A)   Buying extra inventory because a key supplier offered a special one-time discount
B)   Paying a $100 bonus to all employees at year end
C)   Paying the annual insurance premium on the firm's assets
D)   Needing to purchase a new delivery truck because the old one was totally destroyed in an accident
E)   Contributing $1,000 to help fund medical care for an uninsured neighborF) A) and B)
G) C) and D)

Question 10

Which one of the following statements concerning disbursement float is correct?

Accepted Answer

A)   Disbursement float is the period of time between a firm making a bank deposit and the funds from that deposit being available to the firm.
B)   Disbursement float decreases when a check is delayed in the mail due to an extended holiday weekend.
C)   Disbursement float causes the available balance to exceed the ledger balance.
D)   Disbursement float is being totally eliminated by the Check Clearing Act for the  Century.
E)   Disbursement float exists when the available balance is less than the book balance.F) B) and D)
G) C) and D)

Question 11

Which one of the following is most likely the fastest method of collecting cash?

Accepted Answer

A)   Requiring customers to submit all payments to a lockbox
B)   Requiring customers to submit all payments to the home office
C)   Initiating a financial electronic data interchange at the time of sale
D)   Offer customers credit terms of 1/5, net 15
E)   Eliminating all disbursement floatF) C) and D)
G) A) and E)

Question 12

On May 11, you purchased $3,700 of merchandise from a supplier. The terms of the sale were 1/5, net 15. The discounted amount due is _____ which is payable no later than _____.

Accepted Answer

A)   $2,960; May 16
B)   $3,515; May 26
C)   $3,515; May 16
D)   $3,663; May 16
E)   $3,663; May 26F) C) and D)
G) All of the above

Question 13

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 only have 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) A) and D)
G) A) and C)

Question 14

Cash concentration accounts:

Accepted Answer

A)   are no longer needed since the Check Clearing Act for the  Century has been passed.
B)   eliminate the need for lockboxes.
C)   decrease a firm's disbursement float by reducing mail and processing delays.
D)   allow firms to more efficiently handle cash.
E)   tend to decrease a firm's investment income.F) All of the above
G) A) and E)

Question 15

Explain the basic structure and workings of a disbursement system that utilizes zero-balance accounts.

Accepted Answer

The purpose of a zero-balance account is...

Question 16

Which one of the following is the need to hold cash simply as a financial reserve?

Accepted Answer

A)   Precautionary motive
B)   Opportunistic motive
C)   Speculative motive
D)   Activity motive
E)   Transaction motiveF) A) and B)
G) C) and D)

Question 17

Which one of the following is most commonly used in international trades?

Accepted Answer

A)   Sight draft
B)   Time draft
C)   Commercial paper
D)   Banker's acceptance
E)   Open accountF) A) and C)
G) A) and B)

Question 18

Kelly's Corner writes 18 checks a day for an average amount of $630 each. These checks generally clear the bank 2.5 days after they are written. In addition, the firm generally receives an average of $16,400 a day in checks. Deposited amounts are available after 2 days. What is the amount of the firm's disbursement float?

Accepted Answer

A)   $22,680
B)   $25,800
C)   $28,350
D)   $29,840
E)   $32,800F) A) and B)
G) C) and D)

Question 19

What is the primary purpose of a cash discount?

Accepted Answer

A)   Customer compensation for an out of stock item
B)   Customer compensation for faulty goods or services
C)   Means of offsetting the interest charges on an account receivable
D)   Inducement to pay promptly
E)   Incentive to purchase a specialty itemF) A) and E)
G) A) and D)

Question 20

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) A) and B)
G) C) and D)

Exam 17: Working Capital Management

Which one of the following is a speculative motive for holding cash?

Correct Answer
verified

Which one of the following best illustrates the concept of derived demand?

Correct Answer
verified

Which one of the following is the need to hold cash simply as a financial reserve?

Correct Answer
verified

Which one of the following is most likely the fastest method of collecting cash?

Correct Answer
verified

Which one of the following inventory management approaches determines the finished goods inventory level and then works backwards until the raw material needs are determined?

Correct Answer
verified

Explain the basic structure and workings of a disbursement system that utilizes zero-balance accounts.

Correct Answer
verified
The purpose of a zero-balance account is...
View Answer

What is the primary purpose of a cash discount?

Correct Answer
verified

A firm's float management policy is most apt to include which one of the following statements?

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Which one of the following is a special post office mailbox that is used to speed up the collection of accounts receivable payments?

Correct Answer
verified

Correct Answer
verified

Kate's Korner Market monitors 3 percent of its inventory on a daily basis, another 20 percent on a weekly basis, and the remaining inventory on a quarterly basis. What inventory management approach is being used?

Correct Answer
verified

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

Correct Answer
verified

On May 11, you purchased $3,700 of merchandise from a supplier. The terms of the sale were 1/5, net 15. The discounted amount due is _ which is payable no later than _.

Correct Answer
verified

Which one of the following is most commonly used in international trades?

Correct Answer
verified

Which one of the following statements concerning disbursement float is correct?

Correct Answer
verified

Cash concentration accounts:

Correct Answer
verified

Which one of the following defines the terms of sale?

Correct Answer
verified

Correct Answer
verified

Exam 17: Working Capital Management

Which one of the following is a speculative motive for holding cash?

Correct AnswerverifiedShow Answer

Which one of the following best illustrates the concept of derived demand?

Correct AnswerverifiedShow Answer

Which one of the following is the need to hold cash simply as a financial reserve?

Correct AnswerverifiedShow Answer

Which one of the following is most likely the fastest method of collecting cash?

Correct AnswerverifiedShow Answer

Which one of the following inventory management approaches determines the finished goods inventory level and then works backwards until the raw material needs are determined?

Correct AnswerverifiedShow Answer

Explain the basic structure and workings of a disbursement system that utilizes zero-balance accounts.

Correct AnswerverifiedThe purpose of a zero-balance account is...View AnswerShow Answer

What is the primary purpose of a cash discount?

Correct AnswerverifiedShow Answer

A firm's float management policy is most apt to include which one of the following statements?

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

Correct AnswerverifiedShow Answer

Which one of the following is a special post office mailbox that is used to speed up the collection of accounts receivable payments?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Kate's Korner Market monitors 3 percent of its inventory on a daily basis, another 20 percent on a weekly basis, and the remaining inventory on a quarterly basis. What inventory management approach is being used?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

On May 11, you purchased $3,700 of merchandise from a supplier. The terms of the sale were 1/5, net 15. The discounted amount due is _____ which is payable no later than _____.

Correct AnswerverifiedShow Answer

Which one of the following is most commonly used in international trades?

Correct AnswerverifiedShow Answer

Which one of the following statements concerning disbursement float is correct?

Correct AnswerverifiedShow Answer

Cash concentration accounts:

Correct AnswerverifiedShow Answer

Which one of the following defines the terms of sale?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
The purpose of a zero-balance account is...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

On May 11, you purchased $3,700 of merchandise from a supplier. The terms of the sale were 1/5, net 15. The discounted amount due is _ which is payable no later than _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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