Finance 379 Week 7 Hmwk

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Question 1. 1. (TCO 2) Select any actions that do not affect the cash account. Select all that apply: (Points : 3)

* 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

Question 2. 2. (TCO 2) Which one of the following actions will decrease the operating cycle? (Points : 3)

eliminating all inventory items that are slow sellers

*delaying payments to suppliers

paying suppliers faster

increasing the amount of inventory on the shelves

granting customers more time to pay for their credit purchases

Question 3. 3. (TCO 2) Assume Green Leaf Nursery anticipated sales of $630 in the first quarter. Accounts receivable at the beginning of the year was $373. Assuming a collection period of 60 days, which is the approximate cash collection for the quarter? (Points : 3)

*$420

$607

$590

$580

None of the above

Question 4. 4. (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: (Points : 3)

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.

Question 5. 5. (TCO 2) Which of the following statements is true? Select all that apply: (Points : 3)

*The optimal credit policy minimizes the total cost of granting credit.

*There is an opportunity cost associated with not offering credit.

*An increase in a firm's average collection period generally...