If a firm’s credit period is increased, the sales volume can be expected to ________, the investment in accounts receivable can be expected to ________, and the bad debt expenses can be expected to ________. A) increase; decrease; decrease B) increase; increase; decrease C) increase; increase; increase D) decrease; decrease; decrease ANSWER C
The net effect of changes in a cash discount period is quite difficult to analyze because they are directly attributable to the three forces affecting a firm’s investment in accounts receivable. Indicate whether the statement is true or false ANSWER TRUE
If a firm’s credit period is decreased, the sales volume can be expected to ________, the investment in accounts receivable can be expected to ________, and the bad debt expenses can be expected to ________. A) increase; decrease; decrease B) increase; increase; decrease C) increase; increase; increase D) decrease; decrease; decrease ANSWER D
An increase in accounts receivable turnover due to an increase in collection efforts will decrease a firm’s marginal investment in accounts receivable. Indicate whether the statement is true or false ANSWER TRUE
Accounts receivable due over 90 days total ________. (See Table 14.6) A) $200,000 B) $470,000 C) $300,000 D) $100,000 ANSWER C
A decrease in collection efforts will result in an increase in sales volume, an increase in the investment in accounts receivable, an increase in bad debt expenses, and a decrease in collection expenditures. Indicate whether the statement is true or false ANSWER TRUE
An evaluation of the firm’s collection efforts based on the aging schedule would suggest ________. (See Table 14.6) A) poor credit management B) satisfactory credit management C) superior credit management D) overzealous collection efforts ANSWER A
Increased collection expenditures should reduce the investment in accounts receivable and bad debt expenses, increasing profits. Indicate whether the statement is true or false ANSWER TRUE
An increase in collection efforts by a firm will result in ________ in sales volume, ________ in the investment in accounts receivable, ________ in bad debt expenses, and ________ in collection expenditures. A) an increase; a decrease; an increase; a decrease B) an increase; a decrease; a decrease; an increase C) an increase; a decrease; […]
An aging schedule breaks down accounts receivable into groups on the basis of the first letter of the name of the company that owes on the account. Indicate whether the statement is true or false ANSWER FALSE
