Transactions is source of cash

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Reference no: EM131361845

1. Which of the following terms is defined as the length of time between the purchase of inventory and the date of receipt of cash from the sale of that inventory is called the:

A. Inventory period.

B. Accounts Receivable period.

C. Accounts Payable period.

D. Operating cycle.

E. Cash cycle.

2. Which one of the following transactions is a source of cash?

A. granting credit to a customer

B. purchasing new machinery

C. making a payment on a bank loan

D. purchasing inventory

E. accepting credit from a supplier

3. Which TWO of the following transactions represent uses of cash?

A. Collecting a receivable

B. Increasing inventory

C. Obtaining a bank loan

D. Issuing common stock

E. Paying a supplier for previous purchases

4. Which one of the following statements is correct concerning the cash cycle?

A. The longer the cash cycle, the more likely a firm will need external financing.

B. Increasing the accounts payable period increases the cash cycle.

C. A positive cash cycle is preferable to a negative cash cycle.

D. The cash cycle can exceed the operating cycle if the payables period is equal to zero.

E. Offering early payment discounts to customers will tend to increase the cash cycle.

Reference no: EM131361845

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