ACCA 105 CHAP 9 MULTIPLE CHOICE QUESTIONS WITH ANSWERS

MULTIPLE CHOICE

1. Cash consists of all of the following except
a.
deposits in savings accounts.
b.
money orders from customers.
c.
compensating balances.
d.
IOUs from customers.

ANS: D PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic
LOC: Learning Type: Recall KEY: cash and cash equivalents

2. A company's acceptance of credit cards like Visa is an example of
a.
securitization.
b.
factoring with recourse.
c.
discounting.
d.
factoring without recourse.

ANS: D PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic
LOC: Learning Type: Comprehension KEY: financing receivables

3. Which of the following accounts is classified as a short-term financial asset?
a.
Office Supplies
b.
Accounts Receivable
c.
Equipment
d.
Prepaid Insurance

ANS: B PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic
LOC: Learning Type: Comprehension KEY: short-term asset management issues

4. Which of the following is not classified as a short-term financial asset?
a.
Accounts Receivable
b.
Notes Receivable
c.
Inventory
d.
Cash

ANS: D PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic
LOC: Learning Type: Recall KEY: short-term asset management issues

5. The sale or transfer of accounts receivable to raise funds is called
a.
discounting.
b.
collateralizing.
c.
pledging.
d.
factoring.

ANS: D PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic
LOC: Learning Type: Recall KEY: financing receivables

6. Which of the following statements is true about factoring without recourse?
a.
The seller of the receivables is liable upon default of the debtor.
b.
The factor's risk is lower than if the factoring were with recourse.
c.
An example is the use of major credit cards.
d.
The fee will be lower than if the factoring were with recourse.

ANS: C PTS: 1 OBJ: LO1 NAT: AACSB correlation: analytic
LOC: Learning Type: Recall KEY: financing receivables

7. Which of the following topics involves a contingent liability?
a.
Installment accounts receivable
b.
A discounted note receivable
c.
Securitization