Question 1

Sales for December for Team Shirts were $36,000.The average net accounts receivable was $1,425.The accounts receivable turnover was ________.

Accepted Answer

The accounts receivable turnover is calculated by dividing the net sales by the average net accounts receivable. Here, $36,000 / $1,425 = 25.26 times.

Question 2

The current ratio provides a test of a company's ability to meet its short-term obligations.

Accepted Answer

The current ratio measures a company's ability to meet its short-term obligations, specifically by comparing its current assets to its current liabilities. A higher current ratio indicates a stronger ability to pay off short-term debts.

Question 3

Airy,Inc.began business January 1,2011.Show the effect of the following 2011 events on the accounting equation:
Part A:  Write in the amount (even if $0)as of or for the Year Ended December 31,2011,AND the name of the financial statement where the line item is found.  Part B:
Continuing from Part A,show the effect on the accounting equation of the 2012 events for Airy,Inc.:  Write in the amount (even if $0)as of or for the Year Ended December 31,2012,AND the name of the financial statement where the line item is found.

Accepted Answer

The answer of Airy,Inc.began business January 1,2011.Show the effect of...

Question 4

Team Shirts' receivables turnover was 12 times per year.The retail industry average for receivables turnover is 13 times per year.

Accepted Answer

Team Shirts' receivables turnover of 12 times per year is lower than the industry average of 13 times per year. This indicates that the company is taking longer to collect its receivables compared to its competitors in the retail industry. As a result, improving its turnover to align with the industry standard would be beneficial for the company.

Question 5

South Sea's sales were $60,000 for 2011 and $45,000 for 2012.Average net receivables were $4,000 for both 2011 and 2012.The receivables turnover for 2011 was ________.

Accepted Answer

The receivables turnover ratio is calculated by dividing total sales by average net receivables. For 2011, it is $60,000 / $4,000 = 15 times.

Question 6

The accounts receivable turnover ratio measures a company's ability to ________.

Accepted Answer

The accounts receivable turnover ratio measures how efficiently a company collects the cash owed to it from its credit customers. A higher turnover ratio indicates that the company is collecting its receivables quickly and efficiently, while a lower ratio suggests that it may be struggling to collect the cash owed to it in a timely manner. This measurement is important for businesses to track, as it affects their cash flow and overall financial health.

Question 7

South Sea's sales were $60,000 for 2011 and $45,000 for 2012.Average net receivables were $4,000 for both 2011 and 2012.The receivables turnover for 2012 was ________.

Accepted Answer

Receivables turnover = Annual credit sales / Average accounts receivable 
For 2012: 
Receivables turnover = $45,000 / $4,000 = 11.25 times

Question 8

Sailz,Inc.began business January 1,2011.Show the effect of the following 2011 events on the accounting equation:
   Write in the amount (even if $0)as of or for the Year Ended December 31,2011,AND the name of the financial statement where the line item is found.  Part B:
Continuing from Part A,now show the effect of the 2012 events on the accounting equation:  Write in the amount (even if $0)as of or for the Year Ended December 31,2012,AND the name of the financial statement where the line item is found.

Accepted Answer

The answer of Sailz,Inc.began business January 1,2011.Show the effect of...

Question 9

During August,Quality Auto Parts had credit sales of $88,500,of which $20,000 were sales to companies in foreign countries.Average net receivables were $2,950.Calculate the accounts receivable turnover.

Accepted Answer

The answer of During August,Quality Auto Parts had credit sales...

Question 10

Quality Auto Parts had credit sales of $50,889.Average net accounts receivable were $566.Calculate the accounts receivable turnover for the period.

Accepted Answer

The answer of Quality Auto Parts had credit sales of...

Question 11

South Sea's sales were $60,000 for 2011 and $45,000 for 2012.Average net receivables were $4,000 for both 2011 and 2012.The average collection period for 2011 was ________.

Accepted Answer

The average collection period is calculated as (Average Net Receivables / Annual Credit Sales) * 365. For 2011, this is ($4,000 / $60,000) * 365 = 24.3 days.

Question 12

Sales divided by average accounts receivable is the ________.

Accepted Answer

The formula for accounts receivable turnover ratio is sales divided by average accounts receivable. This ratio measures how many times a company's accounts receivable is collected during a period, and is used to assess how efficiently a company is managing its credit policy and collecting its receivables.

Question 13

The accounts receivable turnover will be worse if a company accepts major credit cards.

Accepted Answer

Accepting major credit cards can actually improve the accounts receivable turnover as it provides customers with more payment options and can help to speed up the payment process.

Question 14

In 2011,the receivables turnover for Team Shirts was 15 times.In 2012 it was 14.5 times.This means that ________.

Accepted Answer

The receivables turnover ratio decreased from 15 times in 2011 to 14.5 times in 2012, indicating that Team Shirts was less efficient at collecting its receivables in 2012 compared to 2011.

Question 15

The write-off of a specific customer's account receivable will cause the current ratio to decrease.

Accepted Answer

The write-off of a specific customer's account receivable is typically offset by a reduction in the allowance for doubtful accounts (a contra asset account), leaving total assets and the current ratio unchanged.

Question 16

Sales for August for Team Shirts were $25,000.The average net accounts receivable was $1,500.The accounts receivable turnover for August was ________.

Accepted Answer

Accounts receivable turnover = Sales / Average net accounts receivable
Accounts receivable turnover = $25,000 / $1,500
Accounts receivable turnover = 16.67 times

Question 17

The bookkeeper opens the mail,deposits any checks received in the bank,and updates the company's accounts receivable.This is an internal control ________.

Accepted Answer

The answer of The bookkeeper opens the mail,deposits any checks...

Question 18

Cash is an asset that must be safeguarded because ________.

Accepted Answer

The answer of Cash is an asset that must be...

Question 19

Team Instructions: Divide the class into teams of three or four people.Each team member should work the following problem separately outside of class.Then give the students time in class to compare answers with their teammates and put together a final correct copy of the problem.Each team should turn in only one copy of the problem for grading,along with the annual report that they used.All team members will receive the same grade.
Provide students with copies of real merchandising companies' annual reports,or give students the Web addresses of real merchandising companies and ask them to print out the annual reports.All team members should work with the same company's annual report.
Answer the following questions using the annual report assigned to your team:

Accepted Answer

The answer of Team Instructions: Divide the class into teams...

Question 20

The daily bank deposit is made by whoever is going to lunch near the bank.This is an internal control ________.

Accepted Answer

The answer of The daily bank deposit is made by...

Quiz 4: Payment for Goods and Services: Cash and Accounts Receivable