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11) An aging schedule breaks down accounts receivable into groups

Question : 11) An aging schedule breaks down accounts receivable into groups : 1415278

 

11) 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.

12) A firm's credit terms cover ________.

A) credit standards

B) lines of credit

C) cash discount period

D) credit scoring

13) The most stringent step in the collection process is ________.

A) letters

B) personal visits

C) collection agencies

D) legal action

14) The first step in the collection of overdue accounts is ________.

A) a letter

B) contacting a collection agency

C) legal actions

D) a personal visit

15) 2/15 net 45 translates as ________.

A) 15 percent cash discount if paid in 2 days, net 45-day credit period

B) 45 percent of account due in 15 days, payment prior to day 15 receives a 2 percent discount

C) 2 percent cash discount if paid prior to 15 days, if customer does not take a cash discount, the balance is due in 45 days

D) 2 percent of the balance is due in 15 days, the remaining balance is due in 45 days

16) A technique that provides an analyst with the information concerning the proportion of each type of account that has been outstanding for a specified period of time is called ________.

A) credit analysis

B) credit scoring

C) aging of receivables

D) the economic order quantity model

17) Which of the following is true of cash discount?

A) It increases bad debts because after availing discounts all customers may not pay.

B) It decreases the investment in accounts receivable and increases the per unit profit.

C) It helps to speed up collections without putting pressure on customers.

D) It reduces sales because the customers feel that the products are of inferior quality.

18) When a firm initiates or increases a cash discount, sales are expected to ________, the investment in accounts receivable is expected to ________, the bad debt expense is expected to ________, and the profit per unit is expected to ________.

A) decrease; increase; increase; increase

B) decrease; decrease; increase; increase

C) increase; increase; decrease; decrease

D) increase; decrease; decrease; decrease

19) When a firm decreases or cancels a cash discount, sales are expected to ________, the investment in accounts receivable is expected to ________, the bad debt expense is expected to ________, and the profit per unit is expected to ________.

A) decrease; increase; increase; increase

B) decrease; decrease; increase; increase

C) increase; increase; decrease; decrease

D) increase; decrease; decrease; decrease

20) If the cash discount period is increased, a firm's investment in accounts receivable is expected to ________.

A) increase because existing customers attracted by the new policy will buy more products

B) decrease because of non–discount takers paying earlier to avail the cash discount

C) decrease because discount takers will pay more in order to get more discount

D) decrease because new customers will doubt the quality of product due to increase in discount

 

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