Financial Management exercise
TUTORIAL WEEK 13 – MANAGEMENT OF ACCOUNT RECEIVABLES & INVENTORY MANAGEMENT
PART A: MULTIPLE CHOICES QUESTION
1.
The conditions under which a firm sells its goods and services for cash or credit are called the:
a) terms of sale.
b) credit analysis.
c) collection policy.
d) payables policy.
2.
The basic factors to be evaluated in the credit evaluation process, the five Cs of credit, are:
a) conditions, character, capital, control, and capacity
b) capital, collateral, control, character, and capacity
c) character, capacity, control, cessation, and collateral
d) character, capacity, capital, collateral, and conditions.
3.
The restocking quantity that minimizes the firm’s total inventory cost is called the ________.
a) shortage cost
b) carrying cost
c) economic order quantity
d) speculation 4.
________ is a system for managing demand-dependent inventories that minimizes the inventory holdings of a firm at any given time.
a)
Just-in-time inventory
b)
Turnover inventory
c)
Net working capital planning
d)
Inventory scoring
5.
The terms of sale generally include all of the following EXCEPT the:
a) discount period.
b) credit period.
c) cash discount.
d) credit analysis.
6.
A cash discount of 2/10, net 25:
a) discourages customers from paying early.
b) grants free credit for a period of 25 days.
c) grants customers 25 days to pay after the discount period expires.
d) grants customers an additional 15 days to pay if they forfeit the discount.
7.
Which one of the following statements is correct?
a)
An aging schedule helps identify which customers are the most delinquent.
b)
The percentage of total receivables that fall within a certain time period on an aging schedule will remain constant over time even if the firm has seasonal sales.
c)
Normally firms call their delinquent customers prior to sending them a past
PART A: MULTIPLE CHOICES QUESTION
1.
The conditions under which a firm sells its goods and services for cash or credit are called the:
a) terms of sale.
b) credit analysis.
c) collection policy.
d) payables policy.
2.
The basic factors to be evaluated in the credit evaluation process, the five Cs of credit, are:
a) conditions, character, capital, control, and capacity
b) capital, collateral, control, character, and capacity
c) character, capacity, control, cessation, and collateral
d) character, capacity, capital, collateral, and conditions.
3.
The restocking quantity that minimizes the firm’s total inventory cost is called the ________.
a) shortage cost
b) carrying cost
c) economic order quantity
d) speculation 4.
________ is a system for managing demand-dependent inventories that minimizes the inventory holdings of a firm at any given time.
a)
Just-in-time inventory
b)
Turnover inventory
c)
Net working capital planning
d)
Inventory scoring
5.
The terms of sale generally include all of the following EXCEPT the:
a) discount period.
b) credit period.
c) cash discount.
d) credit analysis.
6.
A cash discount of 2/10, net 25:
a) discourages customers from paying early.
b) grants free credit for a period of 25 days.
c) grants customers 25 days to pay after the discount period expires.
d) grants customers an additional 15 days to pay if they forfeit the discount.
7.
Which one of the following statements is correct?
a)
An aging schedule helps identify which customers are the most delinquent.
b)
The percentage of total receivables that fall within a certain time period on an aging schedule will remain constant over time even if the firm has seasonal sales.
c)
Normally firms call their delinquent customers prior to sending them a past