Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 9, Problem 11MC
Which of the following best represents a positive product of a lower number of days’ sales in receivables ratio?
A. collection of receivables is quick, and cash can be used for other business expenditures
B. collection of receivables is slow, keeping cash secured to receivables
C. credit extension is lenient
D. the lender only lends to the top 10% of potential creditors
Expert Solution & Answer
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Students have asked these similar questions
A high accounts receivable turnover ratio indicates
A. customers are making payments quickly.
B. the firm's sales have increased.
C. a large portion of the firm's sales are on credit.
D. many customers are not paying their receivables...
Which of the following statement is true ?
Answer choices :
I. Increase in collection of cash from customer will lead to decrease in days of payable outstanding .
II . Increase in credit sales of the company will lead to increase in days of payable outstanding .
III . Decrease in average accounts payable will cause decrease in accounts payable turnover ratio .
IV . All the above statements are false .
Which of the following is a positive sign that a company can quickly turn its receivables into cash? a. A low receivables turnover ratio.b. A high receivables turnover ratio.c. A low average collection period.d. Both a high receivables turnover ratio and a low average collection period.
Chapter 9 Solutions
Principles of Accounting Volume 1
Ch. 9 - Which of the following is not a criterion to...Ch. 9 - Which of the following best represents the...Ch. 9 - If a customer pays with a credit card and the...Ch. 9 - A car dealership sells a car to a customer for...Ch. 9 - Tines Commerce computes bad debt based on the...Ch. 9 - Doer Company reports year-end credit sales in the...Ch. 9 - Balloons Plus computes bad debt based on the...Ch. 9 - Conner Pride reports year-end credit sales in the...Ch. 9 - Which method delays recognition of bad debt until...Ch. 9 - Which of the following estimation methods...
Ch. 9 - Which of the following best represents a positive...Ch. 9 - South Rims has an accounts receivable balance at...Ch. 9 - What information can best be elicited from a...Ch. 9 - Ancient Grains Unlimited has an accounts...Ch. 9 - Which of the following is not a way to manage...Ch. 9 - Which of the following is true about earnings...Ch. 9 - Which statement is most directly affected by a...Ch. 9 - Michelle Company reports $345,000 in credit sales...Ch. 9 - Which of the following is true of a maturity date?...Ch. 9 - Mark Industries issues a note in the amount of...Ch. 9 - A customer takes out a loan of $130,000 on January...Ch. 9 - A company collects an honored note with a maturity...Ch. 9 - Orion Rentals is unable to collect on a note worth...Ch. 9 - What is the matching principle?Ch. 9 - A beverage wholesale outlet sells beverages by the...Ch. 9 - On January 1, a flower shop contracts with...Ch. 9 - American Signs allows customers to pay with their...Ch. 9 - Which account type is used to record bad debt...Ch. 9 - Earrings Depot records bad debt using the...Ch. 9 - Racing Adventures records bad debt using the...Ch. 9 - Aron Larson is a customer of Bank Enterprises. Mr....Ch. 9 - The following accounts receivable information...Ch. 9 - What are bad debts?Ch. 9 - What are some possible negative signals when the...Ch. 9 - Berry Farms has an accounts receivable balance at...Ch. 9 - What are the two most common receivables ratios,...Ch. 9 - What is the difference between earnings management...Ch. 9 - What is an earnings management benefit from...Ch. 9 - Angelos Outlet used to report bad debt using the...Ch. 9 - What is an earnings management benefit from...Ch. 9 - What are the two methods of revenue recognition...Ch. 9 - What is the installment method?Ch. 9 - What is a possible ramification of deferred...Ch. 9 - What is the completed contract method?Ch. 9 - What is the percentage of completion method?Ch. 9 - British Imports is unable to collect on a note...Ch. 9 - Chemical Enterprises issues a note in the amount...Ch. 9 - What is the principal of a note?Ch. 9 - A customer was unable to pay the accounts...Ch. 9 - What are three differences between accounts...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Consider the following transaction: On March 6,...Ch. 9 - Window World extended credit to customer Nile...Ch. 9 - Millennium Associates records bad debt using the...Ch. 9 - Millennium Associates records bad debt using the...Ch. 9 - The following accounts receivable information...Ch. 9 - Using the following select financial statement...Ch. 9 - Using the following select financial statement...Ch. 9 - Millennial Manufacturing has net credit sales for...Ch. 9 - Mirror Mart uses the balance sheet aging method to...Ch. 9 - Aerospace Electronics reports $567,000 in credit...Ch. 9 - Dortmund Stockyard reports $896,000 in credit...Ch. 9 - Arvan Patel is a customer of Banks Hardware Store....Ch. 9 - Resin Milling issued a $390,500 note on January 1,...Ch. 9 - Mystic Magic issued a $120,250 note on January 1,...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Consider the following transaction: On February...Ch. 9 - Laminate Express extended credit to customer Amal...Ch. 9 - Olena Mirrors records bad debt using the...Ch. 9 - Olena Mirrors records bad debt using the...Ch. 9 - The following accounts receivable information...Ch. 9 - Using the following select financial statement...Ch. 9 - Using the following select financial statement...Ch. 9 - Starlight Enterprises has net credit sales for...Ch. 9 - Outpost Designs uses the balance sheet aging...Ch. 9 - Clovis Enterprises reports $845,500 in credit...Ch. 9 - Fortune Accounting reports $1,455,000 in credit...Ch. 9 - Anderson Air is a customer of Handler Cleaning...Ch. 9 - Rain T-Shirts issued a $440,600 note on January 1,...Ch. 9 - Element Surfboards issued a $210,800 note on...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Jars Plus recorded $861,430 in credit sales for...Ch. 9 - The following accounts receivable information...Ch. 9 - Funnel Direct recorded $1,345,780 in credit sales...Ch. 9 - Review the select information for Bean Superstore...Ch. 9 - The following select financial statement...Ch. 9 - Noren Company uses the balance sheet aging method...Ch. 9 - Elegant Universal uses the balance sheet aging...Ch. 9 - Record journal entries for the following...Ch. 9 - Record journal entries for the following...Ch. 9 - Record journal entries for the following...Ch. 9 - Record journal entries for the following...Ch. 9 - Organics Plus is considering which bad debt...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Prepare journal entries for the following...Ch. 9 - Bristax Corporation recorded $1,385,660 in credit...Ch. 9 - The following accounts receivable information...Ch. 9 - Ink Records recorded $2,333,898 in credit sales...Ch. 9 - Review the select information for Liquor Plaza and...Ch. 9 - The following select financial statement...Ch. 9 - Elegant Linens uses the balance sheet aging method...Ch. 9 - Goods for Less uses the balance sheet aging method...Ch. 9 - Record journal entries for the following...Ch. 9 - Record journal entries for the following...Ch. 9 - Record journal entries for the following...Ch. 9 - Record journal entries for the following...Ch. 9 - Shimmer Products is considering which bad debt...Ch. 9 - Review the new revenue recognition guidance issued...Ch. 9 - You are considering two possible companies for...Ch. 9 - You own a construction company and have recently...Ch. 9 - When a customer is delinquent on paying a notes...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following actions is least likely to increase acompany’s accounts receivable turnover?a. Encouraging customers to use bank credit cards, suchas Visa and MasterCard, rather than other nationalcredit cards, such as American Express.b. Offer customers larger cash discounts for making earlypayments.c. Reduce the interest rate charged to credit customers.d. Sell accounts receivable to a factor.arrow_forwardWhat does an increasing collection period for accounts receivable suggest about a firm's credit policy? Select one: O A. The collection period has no relationship to a firm's credit policy O B. The firm is probably losing qualified customers. C. The credit policy may be too lenient. O D. The credit policy is too restrictive.arrow_forwardWhen a company has a generous credit policy, cash is tied up in receivables and the company must finance its expansion or the payment of its bills through increased borrowing. What label is given to this cost of selling on credit? Carrying cost Sales returns and allowances cost Bookkeeping cost Bad debit costarrow_forward
- Statement I - Relaxation of Credit Standard increases the Investment in Accounts receivableStatement II - Restriction of credit standard may decrease the chance of incurring bad debts that ultimately affects the profit positively a. False; True b. True; False c. False; False d. True; True Which of the following statements is most correct? a. Other things held constant, the higher a firm’s days sales outstanding (DSO), the better its credit department. b. If a firm sells on terms of 2/10, net 30, and its DSO is 30 days, then its aging schedule would probably show some past due accounts. c. If a firm that sells on terms of net 30 changes its policy and begins offering all customers terms of 2/10, net 30, and if no change in sales volume occurs, then the firm’s DSO will probably increase.arrow_forwardWhich of the following statements is most correct? JUST EXPLAIN ONE ANSWER WHICH IS INCORRECT. In managing a firm’s accounts receivable it is possible to increase credit sales per day yet still keep accounts receivable fairly steady if the firm can shorten the length of its collection period. Since receivables and payables both result from sales transactions, a firm with a high receivables-to-sales ratio should also have a high payables-to-sales ratio.arrow_forward19. Company ABC factored its accounts receivable with a financing vendor using a "with recourse" arrangement. What impact might this have on the company? Group of answer choices anger vendors due to later payment Improve cash conversion cycle reduce bad debt Increase days sales outstandingarrow_forward
- 31 - Which of the following is not among the consequences of a loose credit policy ? a) Sales increase B) Collection expenses increase NS) Funds tied to receivables increase. D) The amount of doubtful receivables decreases. TO) Transaction costs increase as they analyze new customers.arrow_forwardWhich of the following is/are a sign that a company cannot quickly turn its receivables into cash (may have more than one answer)? Check All That Apply a)A low receivables turnover ratio. b)A low average collection period. c)A high receivables turnover ratio. d)A high average collection period.arrow_forwardFirm A had no credit losses last year, but 1% of Firm Bs accounts receivable proved to be uncollectible and resulted in losses. Can you determine which firms credit manager is performing better? Why or why not?arrow_forward
- Shimmer Products is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 5.6% of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 13.7% percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0–30 days past due at 5%, 31–90 days past due at 21%, and over 90 days past due at 30%. There is currently a zero balance, transferred from the prior years Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. There is also additional information regarding the distribution of accounts receivable by age. Prepare the year-end adjusting entry for bad debt, using A. Income statement method B. Balance sheet method of receivables C. Balance sheet aging of receivables method D. Which method should the company choose, and why?arrow_forwardWhich of the following is/are a sign that a company can quickly turn its receivables into cash (may have more than one answer)? Check All That Apply a)A high average collection period. b)A low average collection period. c)A low receivables turnover ratio. d)A high receivables turnover ratio.arrow_forwardWhich of the following is NOT a reason for sales discounts to be offered to the debtors(customers)? A. Increase the amount paid by the debtors B. Improve the liquidity by turning the accounts receivable into cash C. Encourage earlier settlement of debts by debtors D. Reduce the level of bad debtsarrow_forward
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