Q: How can the company reduce the level of uncollectible accounts and increase the likelihood that…
A: Uncollectible accounts are those accounts of accounts receivables on which amount due can not be…
Q: Bad debt recovered is a payment received from account receivable from s client or customer whose…
A: Bad debts expense is charged when it is expected that payments from accounts receivables would not…
Q: Factoring" occurs when a business sells some of its accounts receivable to another insitution so it…
A: Accounts receivables are asset for a business because they can be converted into cash when they…
Q: Explain in details the accounts receivables and bad debts?
A: Company is carrying the sales activity after performing the cost ascertainment method. In order to…
Q: An accounting procedure that (1) estimates and reports bad debts expense from credit sales during…
A: Accounts receivable: Accounts receivable refers to the amounts to be received within a short period…
Q: Which of the following statements is false regarding the different bases used for the allowance…
A: Solution 1: "three bases are generally accepted, the percentage of sales , the percentage of…
Q: A disadvantage of basing bad debt expense on the historical relationship between actual bad debts…
A: Bad Debt expense is the estimate of debts which can be bad or uncollectible. When company has…
Q: Which account is to be credited to reinstate an account during a bad debt recovery, using the…
A: Bad debt expense is a number of accounts receivable that the company may not recover from the…
Q: Which statement is false? a. The amount of Accounts Receivable pledged should be excluded from…
A: Accounts receivables:-Accounts receivables includes the balance which is due to firm on the goods…
Q: Which of the following methods may not be appropiate for estimating bad debt expense? a. Percentage…
A: The bad debt expense is created for the debtors which company finds that would not make the full…
Q: The objectives of Receivables Management are as follows: a. All of above O b. To maintain…
A: Lets understand the meaning of receivable management. As the term suggest, receivable management is…
Q: Which of the following methods may not be appropiate for estimating bad debt expense? a. percentage…
A: Bad debt expense means those accounts receivables that can not be collected. It depends on the…
Q: Question 1: Why do we need to estimate doubtful accounts? Question 2: Which is better to have?…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: What is the effect of the following situations on the cost of accounts receivable financing? (A) A…
A: It will increase default chances
Q: Explain the typical way companies account for uncollectible accounts receivable (bad debts).
A: Definition: Bad debt expense: Bad debt expense is an expense account. The amounts of loss incurred…
Q: How does the percent-of-sales method compute bad debts expense?
A: In percent of sales method, bad debt expenses are computed as a predetermined percentage of credit…
Q: Which of the following statement is true ? Answer choices : I. Increase in collection of cash…
A: Inventory- Inventory, like cash, bank deposits, and accounts receivable, is a current asset. The…
Q: pense and accounts receivable balance. Under different circumstances, another method is used called…
A: When there is only one large accounts receivable due from one client the direct write off method if…
Q: How does collection policy influence sales and the bad debt expenses
A: Solution Note : Dear students as per the Q&A guidelines we are required to answer the first…
Q: Using the following key, identify the effects of the following transactions or conditions on the…
A: a. A credit sale Accounts receivable (Asset) = Increase Sale (Revenue) = Increase Asset =…
Q: A method of estimating bad debts that focuses on the income statement rather than the balance sheet…
A: Bad Debts - It is an uncollectible amount out of the Accounts Receivables even after multiple…
Q: Explain the typical way companies account for uncollectible accounts receivable (bad debts). When is…
A: Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the…
Q: The estimate of a bad debt expense may be based on the historical relationship between actual bad…
A: Loss from uncollectible accounts means where goods has been sold on credit and amount has not been…
Q: Receivables turnover ratio= (net sales) / ( average accounts receivable net). What is included in…
A: The Definition is Very important as it will clarify all issues. Receivable Turnover ratio = This…
Q: Which of the following actions is least likely to increase acompany’s accounts receivable…
A: Accounts receivable turnover analyzes the number of times accounts receivables is collected and…
Q: If company sells its accounts receivables to a factor (such as a finance company), which of the…
A: Factoring is a financial exchange in which a corporation sells its receivables to a financial…
Q: By restricting credit, and granting short maturities to speed up accounts receivable turnover, sales…
A: Accounts receivable Turnover ratio: This ratio is calculated to determine how often receivable are…
Q: The allowance for doubtful is not: a. credited when bad debts expense is estimated and recorded…
A: Allowance for doubtful account is a contra asset account which is related to accounts receivables.…
Q: Estimation of uncollectible accounts receivable based on accounts receivable Group of answer choices…
A: bad debts are the number of debtors from which the company is unable to collect the amount. So this…
Q: Indicate the most likely effect of the following changes in credit policy on the receivables…
A:
Q: receivables appear to be abnormally high?
A: Option a is wrong because the expansion of sales volume late in the year is a factor to be…
Q: When is it acceptable to use the uncollectible accounts? O when the expected bad debts are…
A: Solution: Direct write method is the method of recorded bad debts expense when actual bad debts…
Q: Over/Under: Alpha's bookkeeper made a mistake by erroneously recording a loan from Beta Bank as a…
A: Every transaction has dual effect on the accounting equation. Total Assets = Total liabilities +…
Q: Which of the following changes in credit standards and conditions would cause an improvement in…
A: Credit standards refer to the credit policies of a company, the credit period it extends and the…
Q: The objective of accounts receivable management is to collect receivables as soon as possible…
A: Accounts receivable management refers to managing the debtors of the company. It is to ensure that…
Q: When the allowance method of recognizing bad debt expense is used, the allowance for doubtful…
A: ANSWER When the allowance method of recognizing bad debt expense is used, the allowance for…
Q: Why are sales, sales returns and allowances, bad debts, cashdiscounts, accounts receivable, and…
A: Financial Statements: Financial statements are written records that convey the business activities…
Q: All of the following are problems associated with the valuation of accounts receivable except A)…
A: Accounts receivable:Accounts receivable is the amount of cash owed to the company by the customer…
Q: When using the allowance method for accounting for bad debts, accounts receivable is reported on the…
A: The allowance for doubtful accounts is created to record estimated bad debt expense for the period.
Q: Which among the statements is not correct? a. Net realizable value of accounts receivable results…
A: Account receivable means the amount due from customer whom we sold the goods on credit. Allowance…
Q: Accounts receivable that cannot be collected due to bankruptcy or another reason are referred to as…
A: Accounts receivable can be define as an asset for an organization which arises when organization…
Q: MULTIPLE CHOICE What is the effect of the following situations on the cost of accounts receivable…
A: Account Receivable - This is the sum that the business is owed for credit sales it has made to…
Q: When a large account receivable balance is due from one client it is logical to use the direct…
A: Accounts receivable (AR) is the sum owed to a business for goods or services delivered or used but…
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- 29. Which one of the following statements is correct regarding capital Investment appraisal methods?a) The Payback period takes into account all the cash flows accruing to the projectb) The Net Present value method does not take the time value of money into accountc) The Accounting Rate of Return takes the time value of cash flows into consideration and is the one most often used in practice by business organisationsd) The Internal Rate of Return is the discount rate at which the net present value is zero22. A qualitative factor (as opposed to a quantitative factor) that managment should consider when evaluating alternative capital investments would be Group of answer choices estimated costs The corporate strategy projected net cash flows economic returns and IRR9-1 Forecasting risk is important for financial managers because Select one: a. the firm may not be able to correctly project its future financing costs without considering risk. b. forecasts by industry analysts may not agree with the firm’s forecasts of its future revenues. c. strategic options cannot be included in the capital budgeting decision criteria without considering risk. d. the investment decision process should aim to match projected cash flows with actual cash flows. e. overly optimistic estimation of future cash flows may lead to incorrect capital budgeting decisions.
- NO1.1 Capital budgeting is the process that a business uses to determine which proposed fixed asset purchases (or projects) it should accept, and which should be declined. This process is used to create a quantitative view of each proposed fixed asset investment, thereby giving a rational basis for making a judgment. Analyze why, despite employing various investment appraisal techniques, large investment projects in big corporations may fail to deliver their estimated cash flows. Critically assess how a failed capital project may affect key stakeholders and shareholder value, and also shape the future strategy of investment capitalQUESTION 17 Which of the following is consistent with a conservative approach to financing working capital? financing short term needs with short term funds financing short term needs with long term debt financing seasonal needs with short term funds financing some long term needs with short term funds1. Explain the profitability-risk trade-off of alternative levels of working capital balances. 2. Explain the profitability-risk trade-off of alternative methods of financing a given working capital investment. 3. Discuss the profitability versus risk trade-offs associated with alternative levels of working capital investment. 4. A. which of the following working capital financing policies subjects the firm to a greater risk?i. Financing permanent current assets with short-term debtii. Financing fluctuating current assets with long-term debtB. Which policy will produce the higher expected profitability?
- 15 The time value of money concept is given consideration in long-range investment decisions by Group of answer choices assuming equal annual cash flow patterns weighting cash flows with subjective probabilities assigning greater value to more immediate cash flows investing only in short-term projects1. The payback criterion for capital investment decisionsa. is conceptually superior to the IRR criterion b. takes into consideration the time value of money c. gives priority to rapid recovery of cash d. emphasizes the most profitable projects(a) Identify and briefly describe two phases of the capital budgeting process. (b) Would saving time by skipping one of these phases in the capital budgeting process make sense financially? Financially, why would a company: (a) increase its dividend; (b) buy back some of its common stock shares; (c) pay down some of its debt; (d) increase its use of internal financing; (e) take the public firm private? Explain how a company could: (a) avoid a backlog of orders when sales exceed expectations; (b) avoid product defects on new products; (c) offer more credit to its customers when it already has a bad debt problem; (d) improve its credit rating with suppliers after paying some late; (e) lower its cost of financing when the market interest rate has increased. FE5 Describe a business practice that would help a company manage each of the following financial risks: (a) liquidity risk; (b) interest rate risk; c) credit risk.
- Question 5 The Finance Director of Kawabwa Construction plc recently overhauled the control system and designed a new method of assessing capital investments that applies the NPV rule to all new investment proposals and will assess performance of current of investments by the same method. He has created a report that will go to the board of directors monthly. This will give an NPV estimation to the cash flows produced and expected by each investment, and CFO plans to use this as a signaling device on the performance of all investments. This, he claims, will introduce rigour into the whole use of capital process. The Chairman ventured the opinion that this approach was a receipt for disaster. Why do you think he felt this way?7) Management may impose internal limits on investment expenditure despite the availability of positive NPV projects. What term is used for these limits? A) Divisible one-period rationing B) Hard capital rationing C) Soft capital rationing D) Indivisible one-period rationingQUESTION 17 WACC can be used in investment appraisal in all the following circumstances, except: A. Business risk of investment project is similar to business risk of existing operations. B. Incremental finance is raised in proportions that preserve existing capital structure. C. Required return of existing finance sources is not affected by new investment project. D. Use of CAPM will produce a conflicting result