A firm has total assets of 5,320, net sales of 8,395, average receivables of 894, current assets of 2,393 and a current ratio of 1.2. Its average receivables collection period equals ________.
Answer(s): D
This is measured by two ratios in slightly different ways:E. Receivables turnover ratio = Net annual sales/average receivablesF. Average receivables collection period = 365/receivables turnover In this case, receivables turnover = 8,395/894 = 9.39. Therefore, average receivables collection period = 365/9.39 = 38.87 days. Notice that the collection period is measured in "days."
Calculating COGS under a periodic inventory system relies on which of the following?
Answer(s): A
Under the periodic inventory system, only the ending inventory is counted and priced. Cost of goods sold is determined by deducting the cost of the ending inventory from the cost of goods available for sale.
When prices are rising, which of the following inventory valuation methods produces a higher ending inventory value?
Answer(s): B
When prices are rising, FIFO will produce the highest ending inventory value because the first in (lowest cost) inventory is the first out. This leaves the most recently purchased inventory on hand and since it was purchased at higher prices, it has the highest cost and ending inventory will have the greatest value.
Which of the following is/ are true?
The basic accounting equation states that Assets = Liabilities + Owners' Equity.
Which of the following would have an effect on cash flow from operations?
Answer(s): C
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