1. Which one of the following increases the cash account? A. Inventory is sold B
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Question
1. Which one of the following increases the cash account?
A. Inventory is sold
B. Buying a new equipment
C. repayment of long-term debt
D. The payment of a cash dividend
E. An increase in accounts receivable
2. Which one of the following will decrease the operating cycle?
A. Paying accounts payable faster
B. Discontinuing the discount given for early payment of an accounts receivable
C. Decreasing the inventory turnover rate
D. Collecting accounts receivable faster
E. Increasing the accounts payable turnover rate
3. Which of the following is the length of collection period if half of current sales are collected in the current quarter, and half of the previous quarter are collected in the current quarter?
A. 30 days
B. 45 days
C. 60 days
D. 90 days
E. 120 days
4. Changes in which one of the following will not affect the operating cycle, all else equal?
A. Inventory turnover rate
B. Days sales in inventory
C. Credit repayment times
D. Payables period
E. Accounts receivable period
5. A negative cash cycle is actually preferable to a positive cash cycle. A. True B. False 6. Brooke Industries has sales of $860,000 and cost of goods sold of $490,000. The firm had a beginning inventory of $98,000 and an ending inventory of $112,000. What is the length of the inventory period?
A. 4.67 days
B. 5.21 days
C. 44.56 days
D. 78.21 days
E. 21.59 days
7. The Down Towner has sales of $642,000 and average accounts payable of $56,400. The cost of goods sold is equivalent to 68 percent of sales. How long does it take Down Towner to pay its suppliers?
A. 32.07 days
B. 43.45 days
C. 40.69 days
D. 47.16 days
E. 31.85 days
8. Candy Corner has an inventory turnover rate of 13, an accounts payable period of 44 days, and an accounts receivable period of 35 days. What is the length of the cash cycle?
A. 4.00 days
B. 22.00 days
C. 12.00 days
D. 17.33 days
E. 19.08 days
Explanation / Answer
1. A. Inventory is sold
2. D. Collecting accounts receivable faster
3. 45 days
4. D. Payables period
5. A. True
6. D. 78.21 days
7. D. 47.16 days
8. E. 19.08 days
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