Match each of the activities listed below with a purpose of the activity listed below.
Match each of the activities listed below with a purpose of the activity listed below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The following is a list of activities that companies perform in relation to their receivables.
Match each of the activities listed below with a purpose of the activity listed below.
1.
|
Selling receivables to a factor.
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select a purpose Determine to whom to extend creditEvaluate the liquidity of receivablesMonitor collectionsAccelerate cash receipts from receivable when necessaryEstablish a payment period | ||
---|---|---|---|---|
2.
|
Reviewing company ratings in The Dun and Bradstreet Reference Book of American Business.
|
select a purpose Establish a payment periodEvaluate the liquidity of receivablesMonitor collectionsDetermine to whom to extend creditAccelerate cash receipts from receivable when necessary | ||
3.
|
Collecting information on competitors’ payment period policies.
|
select a purpose Establish a payment periodDetermine to whom to extend creditEvaluate the liquidity of receivablesAccelerate cash receipts from receivable when necessaryMonitor collections | ||
4.
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Preparing monthly
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select a purpose Accelerate cash receipts from receivable when necessaryMonitor collectionsDetermine to whom to extend creditEvaluate the liquidity of receivablesEstablish a payment period | ||
5.
|
Calculating the accounts receivable turnover and average collection period.
|
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