CH21AQZV7 - Chapter 21 Quiz A Student Name _ _ 1. Student...

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Chapter 21 Quiz A Student Name _________________________ Student ID ____________ ________ 1. The system used to evaluate the probability that a customer might default and upon which the decision to either grant or deny credit is frequently based is called: a. aging. b. turnover assessment. c. credit scoring. d. safety stock. ________ 2. The accounts receivable period extends from the day a credit sale is made until the day the: a. customer mails his or her payment to the firm which issued the credit. b. customer’s payment is received by the firm which issued the credit. c. bank credits the account of the firm which issued the credit to the customer. d. firm which issued the credit deposits the customer’s payment into their bank account. ________ 3. Credit terms of 2/5, net 15 means that a customer: a. receives a 5 percent discount if they pay within 2 days. b. is entitled to a 2.5 percent discount if they pay within 15 days. c. must pay in full within 5 days and is considered delinquent after 15 days. d. must pay in full within 15 days. ________ 4. The optimal amount of credit is represented as a trade-off between the _____ costs and the _____ costs of granting credit. a. variable; fixed b. carrying; opportunity c. marginal; total d. marginal; opportunity ________ 5. A partially assembled car which is being built by General Motors (GM) is classified as _____ inventory. a. raw materials b. just-in-time c. work-in-progress d. finished goods ________ 6. The reorder quantity which minimizes the total inventory cost is called the _____ quantity. a. just-in-time b. safety stock c. restocking d. economic order ________ 7. Your firm currently has a cash sales only policy. Currently, the company is selling 50 units per month at a price of $40 each. These units have a variable cost per unit of $22. The company feels that sales will increase to 80 units per month if the credit policy to changed to net 30. The monthly interest rate is .5 percent. What is the net present value of the proposed switch in the credit policy? a. $104,150 b. $105,340 c. $108,209 d. $108,880 ________ 8. You have the opportunity to make a one-time sale provided that you grant a new customer 30 days credit. The sales price of the item is $63, the variable cost is $46 and the relevant interest rate is 1.5 percent per month. What is the net present value of this sale if you feel there is a 40 percent chance the customer will not pay
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CH21AQZV7 - Chapter 21 Quiz A Student Name _ _ 1. Student...

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