Chapter 16 Test Bank

Chapter 16 Test Bank - CHAPTER 16 Short-Term Financial...

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Unformatted text preview: CHAPTER 16 Short-Term Financial Planning I. DEFINITIONS Topic: OPERATING CYCLE 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 Answer: A Topic: INVENTORY PERIOD 2. The length of time between the acquisition of inventory and its sale is called the ______________. A) operating cycle B) inventory period C) accounts receivable period D) accounts payable period E) cash cycle Answer: B Topic: ACCOUNTS RECEIVABLE PERIOD 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 Answer: C Topic: ACCOUNTS PAYABLE PERIOD 4. The length of time between the acquisition of inventory and payment for it is called the ______________. A) operating cycle B) inventory period C) accounts receivable period D) accounts payable period E) cash cycle Answer: D Topic: CASH CYCLE 5. The length of time between the payment for 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 Answer: E Topic: CARRYING COSTS 6. Costs of the firm that rise with increased levels of investment in its current assets are called: A) Carrying costs. B) Shortage costs. C) Order costs. D) Safety costs. E) Trading costs. Answer: A Topic: SHORTAGE COSTS 7. Costs of the firm that fall with increased levels of investment in its current assets are called: A) Carrying costs. B) Shortage costs. C) Debt costs. D) Equity costs. E) Payables costs. Answer: B Topic: CASH BUDGET 8. The 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. Answer: C Topic: LINE OF CREDIT 9. A prearranged, short-term bank loan made on a formal or informal basis, and typically reviewed for renewal annually, is called a ______________. A) letter of credit B) cleanup loan C) compensating balance D) line of credit E) revolver Answer: D Topic: REVOLVER 10. A prearranged credit agreement with a bank typically open for two or more years is called a: A) Letter of credit. B) Cleanup loan. C) Compensating balance. D) Line of credit. E) Revolver. Answer: E Topic: COMPENSATING BALANCE 11. A fraction of the available credit on a loan agreement deposited by the borrower with the bank in a low (or non)-interest-bearing account is called a ______________....
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This note was uploaded on 05/10/2011 for the course FIN 3716 taught by Professor Fang during the Spring '10 term at LSU.

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Chapter 16 Test Bank - CHAPTER 16 Short-Term Financial...

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