Which of the following statements is most correct? JUST EXPLAIN ONE ANSWER WHICH IS INCORRECT. In managing a firm’s accounts receivable it is possible to increase credit sales per day yet still keep accounts receivable fairly steady if the firm can shorten the length of its collection period. Since receivables and payables both result from sales transactions, a firm with a high receivables-to-sales ratio should also have a high payables-to-sales ratio.

Which of the following statements is most correct? JUST EXPLAIN ONE ANSWER WHICH IS INCORRECT. In managing a firm’s accounts receivable it is possible to increase credit sales per day yet still keep accounts receivable fairly steady if the firm can shorten the length of its collection period. Since receivables and payables both result from sales transactions, a firm with a high receivables-to-sales ratio should also have a high payables-to-sales ratio.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 11MC: Which of the following best represents a positive product of a lower number of days sales in...

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Which of the following statements is true? O As a general rule, management would want to reduce the firm's average collection period. O As a general rule, a firm is not financially affected by the amount of time required to collect its accounts receivable. O As a general rule, management would want to increase the firm's average collection period. O As a general rule, management would want to reduce the firm's accounts receivable turnover ratio.
In constructing a pro forma balance sheet a manager can estimate the accounts receivable because: Select one: a. managers typically construct a pro forma income statement prior to the balance sheet. Thus, an estimate of sales has already been made and this is critical to estimating accounts receivable. O b. if the firm has already made an estimate of expected sales, then it can also estimate average daily sales. O c. if the firm maintains similar credit standards it can use the historical average age of accounts receivable to help estimate the anticipated average age of accounts receivable O d. if the firm has each piece of information as stated in the three choices above THEN they can estimate accounts receivable for the pro forma balance sheet..
Which of the following is true? a. If the payment term of n/20 shifted to 5/10, n/20 to start offering customers a cash discount, assuming sales remain to be constant, the day sales outstanding of the firm will likely shorten b. If a firm’s volume of credit sales decreases, then its liquidity ratios will also decrease. c. Relatively more restrictive credit term as comparing to other firms within the same industry will have a potential increase in sales d. High assets turnover is being reflected by inefficiencies present in the management of inventory
I am currently working on a study guide and came across the following question. Which of the following statements correctly reflects the effects of granting credit to customers? a) total revenues may increase if both the quantity sold and the price per unit increase when credit is granted b) a firm's cash cycle generally increases if credit is granted, all else equal c) both the cost of default and the cost of discounts must be considered before granting credit d) a firm may have to increase its borrowing if it decides to grant credit to its new customers e) all of the above My professor stated that the answer is all of the above, but after going through the readings and resources provided I could not find a way to understand how each answer is considered to be correct. I also e-mailed my professor and am waiting for a response, so I decided to post my question here as well.
Making changes to a firm’s credit policy involves trade-offs. Assuming that all other factors remain constant, which of the following are outcomes expected to result from an increase in a firm’s cash discount? Check all that apply. An increase in the cost of the discounts given An increase in the firm’s bad-debt expenses An increase in the firm’s credit sales, a speeding up of customer payments, and a reduction in the firm’s receivables investment An increase in the creditworthiness of the firm’s customers
Which of the following actions is least likely to increase acompany’s accounts receivable turnover?a. Encouraging customers to use bank credit cards, suchas Visa and MasterCard, rather than other nationalcredit cards, such as American Express.b. Offer customers larger cash discounts for making earlypayments.c. Reduce the interest rate charged to credit customers.d. Sell accounts receivable to a factor.
A high accounts receivable turnover ratio indicates A. customers are making payments quickly. B. the firm's sales have increased. C. a large portion of the firm's sales are on credit. D. many customers are not paying their receivables...
Which of the following is a positive sign that a company can quickly turn its receivables into cash? a. A low receivables turnover ratio.b. A high receivables turnover ratio.c. A low average collection period.d. Both a high receivables turnover ratio and a low average collection period.
Which of the following statements is most correct? a. A cash management system that maximizes collections float while minimizing disbursement float is preferable to one that has lower collections float while increasing disbursement float. b. Other things held constant, a firm will need a smaller line of credit if it can arrange to pay its bills by the 5th of each month than if its bills come due uniformly during the month. c. None of the statements are correct. d. The use of a lockbox is intended to reduce cash theft losses. In the event that if the cost of the lockbox is less than the theft losses avoided, the lockbox should be installed. e. A cash management system that minimizes collections float while increasing disbursement float outperforms one with higher collections float but lower disbursement float.
What are some possible negative signals when the product of the accounts receivable turnover ratio is lower (i.e., fewer times)?
Which of the following is/are a sign that a company can quickly turn its receivables into cash (may have more than one answer)? Check All That Apply a)A high average collection period. b)A low average collection period. c)A low receivables turnover ratio. d)A high receivables turnover ratio.
What does an increasing collection period for accounts receivable suggest about a firm's credit policy? Select one: O A. The collection period has no relationship to a firm's credit policy O B. The firm is probably losing qualified customers. C. The credit policy may be too lenient. O D. The credit policy is too restrictive.