Chapter 20

Chapter 20 - Chapter 20 - Credit and Inventory Management...

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Unformatted text preview: Chapter 20 - Credit and Inventory Management Chapter 20 Credit and Inventory Management Multiple Choice Questions 1. Blackwell Brothers sells men's suits. The store offers a 1 percent discount if payment is received within 10 days. Otherwise, payment is due within 30 days. This credit offering is referred to as the: A. terms of sale. B. credit analysis. C. collection policy. D. payables policy. E. collection float. 2. Jillian was recently hired by a major retail store. Her job is to determine the probability that individual customers will fail to pay for their charge sales. Jillian's job best relates to which one of the following? A. terms of sale B. credit analysis C. collection policy D. payables policy E. customer service 3. Town Hardware sells goods on credit with payment due 30 days after purchase. If payment is not received by the 30 th day, the store mails a friendly reminder to the customer. If payment is not received by the 45 th day, the store calls the customer and requests payment and also stops offering credit to that customer. These procedures are referred to as the store's: A. customer service policy. B. credit policy. C. collection policy. D. payables policy. E. disbursements policy. 20-1 Chapter 20 - Credit and Inventory Management 4. Phil's Print Shop grants its customers the right to pay for their print jobs within 30 days of the date of service. This 30-day period is referred to as the: A. payables period. B. cash cycle. C. transactions period. D. credit period. E. disbursement period. 5. Scott purchased a shovel, a rake, and a wheelbarrow from The Local Hardware Store yesterday. Today, the store issued a bill for these items and mailed it to Scott. What is the name given to this bill? A. ledger statement B. warranty C. indenture D. receipt E. invoice 6. Geoff Industries offers its credit customers a 2 percent discount if they pay within 10 days. This discount is referred to as a: A. cash discount. B. purchase discount. C. collection discount. D. market discount. E. receivables discount. 7. Any written proof that a customer owes you money for goods or services provided is referred to as a(n): A. account document. B. sales draft. C. credit instrument. D. commercial paper. E. letter of debt. 20-2 Chapter 20 - Credit and Inventory Management 8. You are viewing a graph which compares costs with the amount of credit extended. Both the carrying costs and the opportunity costs of credit are depicted. What is the function called that represents the summation of these carrying and opportunity costs? A. opportunity cost curve B. credit extension curve C. credit cost curve D. terms of sale graph E. optimal sales graph 9. Assume that RSF is a wholly-owned subsidiary of the Rolled Steel Company. RSF provides credit financing solely for large ticket items purchased from the Rolled Steel Company. Which one of the following terms describes RSF?...
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This note was uploaded on 01/16/2012 for the course ECON 2035 taught by Professor Stahl during the Spring '08 term at LSU.

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Chapter 20 - Chapter 20 - Credit and Inventory Management...

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