Question Details

11. Roger's Home Appliances offers credit to customers it deems worthy of this privilege. To determine if a customer is worthy, the firm computes a numerical value which is used to estimate the probability that the customer will default if credit is granted to them. The process of computing this numerical value is referred to as: 
A. credit scoring.
B. credit capacity.
C. receipts assessment.
D. conditions for credit.
E. consumer analysis.

12. You have recently been hired as an accounting intern for Jefferson Mills. The job that you have been assigned for today is to compile a spreadsheet that has six columns. The column headings are: Invoice #; Customer name; < 30 days; 31-60 days; 61-90 days; > 90 days. You are to list every unpaid invoice by customer name with the amount owed entered into the appropriate column for the number of days between the sale date and today. Once you have completed that, you are to sort the report by customer name and then total the amounts listed in each column. What is this report called? 
A. credit report
B. aging schedule
C. risk assessment report
D. turnover delineation
E. receivables consolidation report

13. Bill is in charge of the inventory for Home Builder's Supply. As an inventory item gets low, he is to restock the item by a quantity that minimizes the total inventory costs for that item. What is this restocking quantity called? 
A. short order quantity
B. refill unit quantity
C. economic order quantity
D. minimum stock level
E. re-order limit

14. Allison has developed a set of procedures for determining the amount of each raw material that she needs to have in inventory if she is to keep her firm's assembly lines operating efficiently. These procedures are commonly referred to by which one of the following terms? 
A. first-in, first-out method
B. the Baumol model
C. net working capital planning
D. economic order procedures
E. materials requirements planning

15. Which one of the following is a system for managing demand-dependent inventories that minimizes the inventory levels of a firm? 
A. just-in-time inventory
B. turnover planning
C. net working capital planning
D. inventory scoring
E. inventory ranking

16. The terms of sale generally include which of the following?
I. type of credit instrument
II. cash discount
III. credit period
IV. discount period 
A. I and III only
B. II and IV only
C. III and IV only
D. II, III, and IV only
E. I, II, III, and IV

17. What is the primary purpose of credit analysis? 
A. determine the optimal credit period
B. establish the effectiveness of granting a cash discount
C. determine the optimal discount period, if any
D. access the frequency and amount of sales by customer
E. evaluate whether or not a customer will pay

18. The period of time that extends from the day a credit sale is made until the day the bank credits a firm's account with the payment for that sale is known as the _____ period. 
A. float
B. cash collection
C. sales
D. accounts receivable
E. discount

19. Which one of the following will increase a firm's investment in accounts receivables? 
A. a decrease in the number of days for which credit is granted
B. a decrease in credit sales
C. an increase in cash sales
D. a decrease in the average collection period
E. an increase in average daily credit sales

20. A firm's total investment in receivables depends primarily on the firm's: 
A. total sales and cash discount period.
B. cash to credit sales ratio.
C. bad debt ratio.
D. average collection period and amount of credit sales.
E. amount of credit sales and cash discount percentage.