Bus 331 Ch.16 quiz

a prearranged short term bank loan is referred to as:

a line of credit

the time between the receipt of inventory and the payment to the supplier for that inventory purchase called the:

accounts payable period

the operating cycle is equal to the:

accounts receivable period plus the inventory period

a forecast of cash receipts and disbursements for the next planning period is called a(n):

cash budget

which one of the following is indicative of a flexible short term financial policy?

high ratio of current assets to sales

Which one of the following is a source of cash

increasing the accounts payable balance

by definition, the operating cycle begins when ____ and ends when ____

inventory is purchased; payment is received for the sale of that inventory

the time it takes to acquire and sell inventory is referred to as the:

inventory period

which of the following actions should lengthen the inventory period?

manufacturing products for inventory rather than for a confirmed order

which one of the following credit terms is most apt to produce the shortest accounts receivable period?

net 10, so the receiver has 10 days to pay off whatever was purchased. if it was 3/10 net 15 they would get a 3% discount if paid within 10 days or else they have 15 days to pay up

which one of the following is a use of cash?

purchasing new fixed assets

the accounts receivable period is the time that elapses between the ____ and the ____

sale of an item; receipt of payment for that sale

accounts receivable financing is the term used to describe which of the following types of loans that involve either the assignment or the factoring of a firm's accounts receivables?

secured short-term

the costs incurred because a firm's investment in current assets is low are called ____ costs

shortage

a cash budget determines which one of the following

the future cash needs of a firm