Question Details

What is the amount of net credit sales for the period 


1. If equal amounts are added to the numerator and the denominator of the current ratio, the
ratio will always
a. increase.
b. decrease.
c. stay the same.
d. equal zero.
2. The acid-test ratio
a. is a quick calculation of an approximation of the current ratio.
b. does not include all current liabilities in the calculation.
c. does not include inventory as part of the numerator.
d. does include prepaid expenses as part of the numerator.
3. If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of
cash by short-term debt and collection of accounts receivable have on the ratio?
Short-term Borrowing Collection of Receivable
a. Increase No effect
b. Increase Increase
c. Decrease No effect
d. Decrease Decrease
4. A company has a receivables turnover of 10 times. The average net receivables during
the period are $300,000. What is the amount of net credit sales for the period?
a. $30,000.
b. $3,000,000.
c. $360,000.
d. Cannot be determined from the information given.
5. If the average collection period is 30 days, what is the receivables turnover?
a. 11.1 times
b. 12.2 times
c. 6.1 times
d. None of these



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