BUSN 379 Week 7 Quiz

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BUSN 379 Week 7 Quiz

1.Question :(TCO 2) Select any actions that do not affect the cash account. Select all that apply:
Student Answer:Goods are sold on credit
An interest payment on a notes payable is made
Raw materials are purchased and paid for with credit
A new machine is purchased and paid for with the business line of credit


 2.Question :(TCO 2) Which one of the following will increase the operating cycle?
Student Answer: increasing the accounts payable period
 decreasing the accounts payable turnover rate
 decreasing the cash cycle
 increasing the accounts receivable turnover rate
 increasing the inventory period


 3.Question :(TCO 2) Assume Green Leaf Nursery anticipated sales of $500 in this quarter. Accounts receivable at the beginning of the quarter was $300. Assuming a collection period of 30 days, which is the approximate cash collections amount for the quarter?
Student Answer: $550
 None of the above


 4.Question :(TCO 2) Best Environment Engineering wrote a check and mailed it to the Electric Co. When the Electric Co. went to deposit the check, it discovered that the bank was closed due to flooding in the area. It was 5 days before the Electric Co. could deposit the check from Best Environment Engineering. Because the Electric Co.’s bank was closed:
Student Answer: Best Environment’s collection float decreased.
 the Electric Co.’s collection float decreased.
 Best Environment’s disbursement float increased.
 the Electric Co.’s disbursements float increased.
 the ledger balance of Best Environment was less than it would have been otherwise.

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 5.Question :(TCO 2) Which of the following statements is true? Select all that apply:
Student Answer:The optimal credit policy minimizes the total cost of granting credit.
Firms should avoid offering credit at all cost.
An increase in a firm’s average collection period generally indicates that an increased number of customers are taking advantage of the cash discount.
The costs of the credit application process and the costs expended in the collection process are carrying costs of granting credit.
Capacity refers to the ability of a firm to meet its credit obligations out its operating cash flows.
The optimal credit policy is the policy that produces the largest amount of sales for a firm.


 6.Question :(TCO 2) You place an order for 100 units of inventory Part A at a unit price of $522. The supplier offers terms of 3/25, net 40. How much should you remit if you take the discount?
Student Answer: $52,200
 None of the above


 7.Question :(TCO 2) Auto Parts sells 1,600 electric parts per week and then reorders another 1,600 parts. If the relevant carrying cost per electric part is $4 and the fixed order cost is $650, what is the total carrying cost and the restocking cost, respectively?
Student Answer: $6,400 and $33,800
 $3,200 and $33,800
 $6,400 and $7,800
 $6,400 and $33,000
 None of the above


 8.Question :(TCO 2) Company ABC has expected sales of 12,000 units this year, an ordering cost of $6 per order and carrying costs of $1.60 per unit. What is the EOQ?
Student Answer: 310 units
 300 units
 150 units
 155 units
 None of the above


 9.Question :(TCO 2) The ___________ is the time that elapses between the sale of an item and the receipt of payment for that sale.
Student Answer: accounts receivable period
 accounts payable period
 cash cycle
 customer operating cycle
 None of the above


 10.Question :(TCO 2) List three ways in which the firm can expedite payments and accounts receivables.



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