If you were asked to lend money to your cousin’s clothing store to help her through a slow sales period, would you be more interested in looking at the current ratio or the quick ratio as a measure of liquidity? Why?

If you were asked to lend money to your cousin’s clothing store to help her through a slow sales period, would you be more interested in looking at the current ratio or the quick ratio as a measure of liquidity? Why?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 11MC: Which of the following best represents a positive product of a lower number of days sales in...

See similar textbooks

Related questions

Q: How can you identify possible causes for the out of balance amount if "Sales Detail Report" and…

A: When you view the reports they can identify possible causes for the out of balance amount.There are…

Q: Determine the decision nature of each of the following issues: Will we purchase on credit or will we…

A: Purchase decision can be defined as the thought process that leading a consumer from identifying a…

Q: hen borrowing on a short-term basis and using the funds to create more inventory (by an equal…

A: Current ratio is indicator of short term liquidity of company.

Q: How would the price equation apply to the purchase price of (a) gasoline, (b) an airline ticket,…

A: Purchase price is defined as the investor's price that makes the payment regarding an investment.…

Q: How would I go about finding the previous reported sales, when I have the current sales and the…

A: Given: Current Sales Percentage increase in Sales

Q: Owner wants to purchase larger percentage of goods on credit. what advice would you give?

A: Goods purchase on credit: Goods are purchased by the company to sell by adding profit margin. Or…

Q: re developing a new product and you use a 12% discount rate to compute its NPV. Your bank, from whom…

A: Discount rate of the project depends on the many factors that are going to be have impact on the…

Q: Which of the following is an advantage of using the net price method for recording cash discounts on…

A: At the time of recording credit sales, there can be some provision for discount to be given. So,…

Q: Which one of the following best defines the term credit scoring? A. Categorizing customers…

A: The statistical tool used to analyze the performance by lenders and financial institutions so as to…

Q: Which of the following is most likely to be used in determining a proper amount to be included in…

A: Allowance for doubtful accounts is a kind of contra asset account. It is used to decrease the value…

Q: When a deposit on returnable containers is forfeited, the firm holding the deposit will experience:…

A: Current liabilities are short-term financial liabilities of a company that are due within a year or…

Q: As a consultant explain to your staff how the absence of Trial Balance will affect the preparation…

A: Comments; Multiple questions asked Trial balance - It is a statement that shows the particular…

Q: Determine the decision nature of each of the following issues: What are the least expensive sources…

A: Business organizations need to take various financial decisions in order to run the business…

Q: Which is correct with regards to the effects of restricting credit standards? * O An increase in…

A: A credit policy lays out the conditions under which consumers who purchase on credit must pay back…

Q: WHICH IS TRUE OR FALSE? I. Play account is the account used to purchase expensive items for…

A: Disclaimer: "Since you have asked multiple questions in one question so we have solve first question…

Q: the way to adjust purchases in order to arrive at the cost of sales figure is to ?

A: Cost of Sales = Opening Inventory + Purchases - Closing Inventory

Q: separate account for sales returns and allowances useful to management? If you owned a…

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: If you are the seller will you provide discount for customers? Why or why not? What type of discount…

A: solution concept In the trade transaction ,the practice of giving and taking…

Q: Thinking about various payment terms for Accounts Payable, do you feel it is always valuable for a…

A: The prime rate means the lowest borrowing rate of money.

Q: If a firm sold some inventory on credit, its current ratio would probably not change much, but its…

A: Current ratio is defined as the liquidity ratio, which used to measure an ability of the company for…

Q: Please check if my total selling and administrative expenses is correct. Put an explanation why is…

A: Selling and admin expenses is an important part or section of income statement of business. It…

Q: plain why it is important for a company to keep track of how much money in discounts is given out?…

A: . Percent of cash discount since 3/15, n/45 is the credit term between the seller and buyer which…

Q: How much is the purchase discounts? How much is input tax on purchases? How much is input tax to be…

A: Input tax is the amount of tax which a business pays it to the vendors on the purchasing of the…

Q: What is a question that should be asked about accounts payable when forecasting? a.) What are the…

A: Accounts payable mirrors the obligation of a business to the leasers or providers, if there should…

Q: Ford Motor Co. is considering alternate methods ofaccounting for the cash discounts it takes when…

Q: Which of the following accounts is used in merchandising but not in service type of business?…

A: Service company deals with the intangible product whereas merchandise company buys tangible product…

Q: able. b. What steps should be taken by a business to reduce/eliminate excessive inventory? Explain…

A: A cash on delivery (COD) transaction occurs when the recipient pays for an item in cash rather than…

Q: When deciding to accept a cash discount from a supplier, on what day is it advisable to take the…

A: Cash discount refers to the discount given by the supplier if the amount is paid before the maximum…

Q: ales and elect the correct response: O cost of sales cost of accounts receivable O high accounts…

A: Since there are multiple questions are given, but as per answering guidelines we do only first one.

Q: What should a company do to improve its accounts receivable turnover rate? increase its sales force…

A: 2/10,n/30 means that a client is given a option to either receive 2% discount for payment to vendor…

Q: Which of the following businesses would most likely not report cost of goods sold on their income…

A: Cost of goods sold refers to that direct costs of the inventory the company incurred to produce the…

Q: The objective of is to encourage the buyer to purchase in large quantities and to increase the level…

A: The sellers of the goods adopt various techniques to encourage the buyers to acquire goods in large…

Q: Which of the following ratios (from a potential customer) would be of primary importance to a seller…

A: Formula: Earnings per share = ( Net income - Preferred dividends ) / number of outstanding shares

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: Suppose customers express greater satisfaction with the accuracy of their charge account bills but…

A: A balanced scorecard seems to be a strategic performance management statistic that assists…

Q: When a company decides to sell its goods on credit, it should evaluate the effect on profit of…

A: An inflow of money either from sales or services by doing business activities is called revenue. It…

Q: A bank that is examining the ratio of annual costs of goods sold to average inventory, is examining…

A: Financial ratios: Financial ratios are performance measurement methods used by company to Measure…

Q: Which is correct with regards to the effects of restricting credit standards? a. Investment in…

A: Restricting credit standard means company strict the credit policy. When company is more concerned…

Q: Which of the following is correct with regards to cash discounts offering? a. It is used lengthen…

A: Solution:- Cash discount means offering some more discounts to the customers, if they pay the amount…

Q: Gillian Company has a current ratio greater than 1 and an acid-test ratio less than 1. How would…

A: Formula: Current Ratio= Total Current AssetsTotal Current Liability Acid Ratio/Quick Ratio= Total…

Q: Determine the following: a. Net Sales b. Net Purchases c. Cost of Goods Sold d. Bad Debts Expense

A: The cost of goods sold refers to the direct costs of manufacturing the commodities supplied by a…

Q: Which of the following would not result in a reduction of the amount invoiced to a customer when a…

A: The discount decreases the amount of payment to be paid to creditors or to be received from…

Question

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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
What is a question that should be asked about accounts payable when forecasting? a.) What are the costs associated with storing goods? b.) How much bad debt should be anticipated? c.) How much cash is needed on hand to meet current liabilities? d.) How quickly can we replenish goods?
WHICH IS TRUE OR FALSE? I. Play account is the account used to purchase expensive items for yourself. II. Diversification is an approach to mitigate losses.
In the credit market model with asymmetric information, determine how a consumer will respond to an increase in the fraction of bad borrowers in the population. And discuss how the credit market model with asymmetric information shows how a financial crisis can reduce consumption.
Select all the following statements that are true. Assume Gross Profit (Sales - COGS) for any product sales is positive. Group of answer choices When you sell goods on account, income and cash flow increase When you sell goods on account, income increases and cash flow decreases When you sell goods on account, income increases and cash flow is unaffected When you collect from customers that had previously purchased goods on account, income and cash flow increase When you collect from customers that had previously purchased goods on account, income increases and cash flow is unaffected When you collect from customers that had previously purchased goods on account, income is unaffected and cash flow increases
When 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 cost
When a company decides to sell its goods on credit, it should evaluate the effect on profit of Additional revenues Additional expenses a. Yes Yes b. Yes No c. No Yes d. No No
For the following transactions, show which Balance Sheet line items will be affected and if the effect will result in the line item increase or reduction. • Purchase a Treasury Bill for cash• Client withdraws savings• Receive a donation• A current loan becomes past due• Purchase motorcycle for staff with short-term credit
Which is correct with regards to the effects of restricting credit standards? a. Investment in accounts receivable will likely increase b. An increase in recognition of doubtful accounts expense will probably happen c. Positive impact on the net profit can be noted from decline in the quantity of goods sold d. Quantity of units sold will probably decrease and will result to a lower sales revenue
I am currently working on a study guide and came across the following question. Which of the following statements correctly reflects the effects of granting credit to customers? a) total revenues may increase if both the quantity sold and the price per unit increase when credit is granted b) a firm's cash cycle generally increases if credit is granted, all else equal c) both the cost of default and the cost of discounts must be considered before granting credit d) a firm may have to increase its borrowing if it decides to grant credit to its new customers e) all of the above My professor stated that the answer is all of the above, but after going through the readings and resources provided I could not find a way to understand how each answer is considered to be correct. I also e-mailed my professor and am waiting for a response, so I decided to post my question here as well.
Which of the following would not be considered a resource cost of inflation? a. Additional trips to the bank b. Comparison shopping c. Reprinting menus d. Reprinting price tags e. Buyers pay more for what they buy
Which of the following is correct with regards to cash discounts offering? Bad debts expense will probably decrease since customers more likely take the advantage of discounts It is used lengthen the cash conversion cycle without putting pressure the clients Investment in accounts receivable will likely grow since more customers will pay on a later date These are granted because customer acquires high quantity of products and goods