Question 1

Scott has been informed by his financial manager that his accounts receivable are being paid much too late.To fix this problem,Scott should

Accepted Answer

develop a credit policy.

Question 2

Capital expenditures differ from operating expenditures in that

Accepted Answer

they are not normally sold or converted into cash.

Question 3

What is a trade draft?

Accepted Answer

An agreement to meet certain terms,which are attached to the shipment,and which must be signed before the goods are delivered to the buyer.

Question 4

What is a promissory note?

Accepted Answer

An agreement signed by the buyer stating when and how much money will be paid to the seller in return for immediate credit.

Question 5

Large companies typically devote ____ cents of every sales dollar to working capital.

Accepted Answer

20

Question 6

Scott is managing a company and he has been advised by his financial manager that his largest source of short-term debt is too high.What source of funding is Scott's financial manager probably talking about?

Accepted Answer

Accounts payable

Question 7

Which of the following is not an accurate statement about long-term expenditures?

Accepted Answer

Long-term expenditures usually require less planning than operating expenditures.

Question 8

Sources of short-term funds include all of the following except

Accepted Answer

bonds.

Question 9

The most common form of trade credit is

Accepted Answer

open-book credit.

Question 10

With respect to inventory,which of the following is correct?

Accepted Answer

Rolls of denim at a Levi's factory is raw materials inventory.

Question 11

A "gentlemen's agreement" to pay for products purchased is known as

Accepted Answer

open-book credit.

Question 12

Jeremy has recently received merchandise along with invoices stating credit terms.Jeremy has most likely been given a(n)

Accepted Answer

open-book credit.

Question 13

The Gap has t-shirts boxed and ready to ship to retailers.These goods make up part of the ________ inventory.

Accepted Answer

finished goods

Question 14

ATC Machine Shops sends its ________ inventory to Warm Inc.to have its manufactured tools heat-treated.

Accepted Answer

work-in-process

Question 15

Working capital is calculated as follows:

Accepted Answer

inventory plus accounts receivable minus accounts payable.

Question 16

Mountain Steel brings in graphite,carbon,iron ore,nickel,and sulphur to produce steel.These supplies are

Accepted Answer

raw materials inventory.

Question 17

Which term is used to identify the granting of credit by one firm to another?

Accepted Answer

Trade credit

Question 18

Before shipping a computer,Mega Computers insists that the buyer sign a document that states when and how much money will be paid.This is a(n)

Accepted Answer

promissory note.

Question 19

Mega Computers has just shipped one of its products to Compucell on faith that they will pay the invoice.This is a(n)

Accepted Answer

open-book credit.

Question 20

For Levi Strauss' jean-making operation,rolls of denim are considered __________,while cut-but-not-yet-sewn jeans are considered ___________ .

Accepted Answer

raw materials inventory; work-in-process inventory

Quiz 20: Financial Decisions and Risk Management

Scott has been informed by his financial manager that his accounts receivable are being paid much too late.To fix this problem,Scott should

Capital expenditures differ from operating expenditures in that

What is a trade draft?

What is a promissory note?

Large companies typically devote ____ cents of every sales dollar to working capital.

Scott is managing a company and he has been advised by his financial manager that his largest source of short-term debt is too high.What source of funding is Scott's financial manager probably talking about?

Which of the following is not an accurate statement about long-term expenditures?

Sources of short-term funds include all of the following except

The most common form of trade credit is

With respect to inventory,which of the following is correct?

A "gentlemen's agreement" to pay for products purchased is known as

Jeremy has recently received merchandise along with invoices stating credit terms.Jeremy has most likely been given a(n)

The Gap has t-shirts boxed and ready to ship to retailers.These goods make up part of the ________ inventory.

ATC Machine Shops sends its ________ inventory to Warm Inc.to have its manufactured tools heat-treated.

Working capital is calculated as follows:

Mountain Steel brings in graphite,carbon,iron ore,nickel,and sulphur to produce steel.These supplies are

Which term is used to identify the granting of credit by one firm to another?

Before shipping a computer,Mega Computers insists that the buyer sign a document that states when and how much money will be paid.This is a(n)

Mega Computers has just shipped one of its products to Compucell on faith that they will pay the invoice.This is a(n)

For Levi Strauss' jean-making operation,rolls of denim are considered ,while cut-but-not-yet-sewn jeans are considered _ .