Which of the following statements is false? O A. A positive cash conversion cycle means the company is paying its payables before receiving its receivables. O B. A negative cash conversion cycle means the company is collecting its receivable before paying its payables. • C. The cash conversion cycle is the length of time required for the company to recieve its inventory and then receive cash from the sales of its inventory. O D. All of the above statements are true.

Which of the following statements is false? O A. A positive cash conversion cycle means the company is paying its payables before receiving its receivables. O B. A negative cash conversion cycle means the company is collecting its receivable before paying its payables. • C. The cash conversion cycle is the length of time required for the company to recieve its inventory and then receive cash from the sales of its inventory. O D. All of the above statements are true.

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

Similar questions

Which of the following statements is true? a. Net cash flow from operating activities must be determined using the indirect method. b. The indirect method adjusts sales for changes in noncash items to produce net cash flow from operating activities. c. Many companies prefer the indirect method because it is easier and less costly to prepare. d. The FASB prefers the indirect method.
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 the effect on cash when current liabilities decrease? A. Cash increases by the same amount. B. Cash decreases by the same amount. C. Cash decreases by twice as much. D. Cash does not change.
What is the effect on cash when current noncash operating assets decrease? A. Cash increases by the same amount. B. Cash decreases by the same amount. C. Cash decreases by twice as much. D. Cash does not change.
An increase in inventories is deducted from net income to arrive at operating cash flow because a. cash payments to customers were larger than the purchases made during the period. b. purchases are larger than the cost of goods sold by the amount that inventories increased. c. cash payments to customers were less than the purchases made during the period. d. purchases are less than the cost of goods sold by the amount that inventories increased. e. All of these.
Which one of the following statements is true if a company's collection period for accounts receivable is unacceptably long? a.The company may need to borrow to acquire operating cash. b.The company should expand operations with its excess cash. c.Cash flows from operations may be higher than expected for the company's sales. d.The company may offer trade discounts to lengthen the collection period.
The cash cycle is longer than the operating cycle when Select one: a. Inventory period is positive b. Account receivable period is positive c. Account payable period is positive d. Receivable cannot be collected from customers e. None of the above answers is correct
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.
Which of the following adjustments would NOT be made to net income when computing cash from operating activities? a.add an increase in Accrued Interest Payable b.deduct the purchase of store equipment c.add the reduction in Accounts Receivable d.add the decrease in Merchandise Inventory
Which of the following is used in computing cash received from customers using the direct method? a.An increase in inventory b.A decrease in accounts receivable c.A decrease in inventory d.An increase in accounts payable
Why does a decrease in receivable turnover create the need for cash from operating activities? (4%)b. Why would ratios that include one balance sheet account and one income statement account such as receivable turnover or return on assets, be questionable if they came from quarterly or other interim financial reports?
In the case of decrease the operating cash cycle, which one of the following actions should be taken? A Delay payments to suppliers B Increase the inventory level while maintaining constant salesC Increase the period of time for which credit is granted to customers D Decrease the rate at which the average inventory is sold