Exam (elaborations)
ACG Test 3 Fin (1)
- Course
- Institution
Exam of 9 pages for the course ACG 201 at ACG 201 (ACG Test 3 Fin (1))
[Show more]
Seller
Follow
modockochieng06
Content preview
ACG Test 3 FinStar Corporation sells its goods on terms of 2/10, n/30. It has a receivables turnover ratio of
7.00. What is its average collection period (also known as the days in receivable ratio)?
A. 52 days
B. 30 days
C. 2,555 days
D. 2 days - ANS-A. 52 days
Solution:
The average collection period is computed by dividing the number of days in the year by the
accounts receivable turnover.
The average collection period = 365/7 = 52 days.
Chapter 8, Learning objective 8: Identify ratios to analyze a company's receivables.
Net credit sales are $800,000, average net receivables total $150,000, average inventory totals
$200,000, and the allowance for doubtful accounts totals $8,000. How much is the average
collection period (also known as the days in receivable ratio)?
A. 5.33 days
B. 328.8 days
C. 2.2 days
D. 68.5 days - ANS-D. 68.5
The accounts receivable turnover is net credit sales divided by average net accounts receivable.
The accounts receivable turnover is net credit sales ($800,000) divided by average net accounts
receivable ($150,000), or 5.333 times.
The average collection period is 365 divided by the accounts receivable turnover, which is
365/5.333 = 68.5 days.
, Which one of the following is not a method used by companies to accelerate cash receipts?
A. Offering discounts for early payment
B. Accepting national credit cards for customer purchases
C. Selling receivables to a factor
D. Writing off receivables - ANS-D. Writing off receivables
Which of the following accounts is debited when a company factors its accounts receivable?
A. Service Charge Expense
B. Interest Expense
C. Accounts Receivable
D. Loss on Sale of Accounts Receivable - ANS-A. Service Charge Expense
At what value are accounts receivable reported on the balance sheet?
Cash realizable value
Maturity value
Present value
Fair market value - ANS-a. Cash realizable value
Lansing Construction Company had the following receivables:
Employee advances
$ 500
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller modockochieng06. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $7.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
67096 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now