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# chap019 - Chapter 019 Short-Term Finance and Planning...

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Chapter 019 Short-Term Finance and Planning Multiple Choice Questions 1. The length of time between the acquisition of inventory and the collection of cash from receivables is called the: A . operating cycle. b. inventory period. c. accounts receivable period. d. accounts payable period. e. cash cycle. SECTION: 19.2 TOPIC: OPERATING CYCLE TYPE: DEFINITIONS 2. The length of time between the acquisition of inventory and its subsequent sale is called the: a. operating cycle. B . inventory period. c. accounts receivable period. d. accounts payable period. e. cash cycle. SECTION: 19.2 TOPIC: INVENTORY PERIOD TYPE: DEFINITIONS 3. The length of time between the sale of inventory and the collection of cash from receivables is called the: a. operating cycle. b. inventory period. C . accounts receivable period. d. accounts payable period. e. cash cycle. SECTION: 19.2 TOPIC: ACCOUNTS RECEIVABLE PERIOD TYPE: DEFINITIONS 19-1

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Chapter 019 Short-Term Finance and Planning 4. The length of time between the acquisition of inventory by a firm and the payment by the firm for that inventory is called the: a. operating cycle. b. inventory period. c. accounts receivable period. D . accounts payable period. e. cash cycle. SECTION: 19.2 TOPIC: ACCOUNTS PAYABLE PERIOD TYPE: DEFINITIONS 5. First United pays for an inventory item on day X. On day Y, First United receives payment from the customer who purchased that inventory item. The time period between day X and day Y is called the: a. operating cycle. b. inventory period. c. accounts receivable period. d. accounts payable period. E . cash cycle. SECTION: 19.2 TOPIC: CASH CYCLE TYPE: DEFINITIONS 6. A graphical representation of the operating and cash cycles is called a(n): a. operating chart. B . cash flow time line. c. production flow line. d. component chart. e. working time line. SECTION: 19.2 TOPIC: CASH FLOW TIME LINE TYPE: DEFINITIONS 19-2
Chapter 019 Short-Term Finance and Planning 7. Costs that increase as a firm acquires additional current assets are called _____ costs. A . carrying b. shortage c. order d. safety e. trading SECTION: 19.3 TOPIC: CARRYING COSTS TYPE: DEFINITIONS 8. Costs that decrease as a firm acquires additional current assets are called _____ costs. a. carrying B . shortage c. debt d. equity e. payables SECTION: 19.3 TOPIC: SHORTAGE COSTS TYPE: DEFINITIONS 9. A forecast of cash receipts and disbursements for the next planning period is called a: a. pro forma income statement. b. statement of cash flows. C . cash budget. d. receivables analysis. e. credit analysis. SECTION: 19.4 TOPIC: CASH BUDGET TYPE: DEFINITIONS 19-3

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Chapter 019 Short-Term Finance and Planning 10. A prearranged, short-term bank loan made on a formal or informal basis, and typically reviewed for renewal annually, is called a(n): a. letter of credit. b. open loan. c. compensating balance. D . line of credit. e. bank note. SECTION: 19.5 TOPIC: LINE OF CREDIT TYPE: DEFINITIONS 11. Money deposited by a borrower with the bank in a low or non-interest-bearing account as part of a loan agreement is called a: A . compensating balance. b. secured credit deposit.
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chap019 - Chapter 019 Short-Term Finance and Planning...

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