Consider the following financial statement information: Item Beginning Year Ending Inventory € 9.780 € 11.380 € 4.108 € 4.938 € 7.636 € 7.927 Accounts Receivable Accounts Payable Credit Sales Cost of Goods Sold € 89.804 € 56.384 Calculate the operating and cash cycles. How do you interpret your answer?
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- . Which one of the following defines the cash cycle? A. Inventory period plus the accounts receivable period B. Inventory period plus the accounts payable period C. Operating cycle minus the inventory period D. Operating cycle minus the accounts payable period E. Operating cycle minus the accounts receivable periodExplain the calculation of net sales and net purchases.The measure of a company’s ability to collect cash from its customers who purchase onaccount is thea. accounts payable turnover.b. cash conversion cycle.c. accounts receivable turnover.d. days’ payable outstanding.
- Which of the following options indicate how quickly accounts receivables are converted into cash? Select one: a. Total assets turnover b. Days to collect accounts receivable c. Working capital d. Accounts receivable turnoverTerminology Match each phrase with its definition. A. Sales discount B. Credit period C. Discount period D. FOB destination E. FOB shipping point F. Gross profit G. Merchandise inventory H. Purchases discount 1. 2. 3. 4. 5. 6. 7. 8. Goods a company owns and expects to see to its customers. Time period that can pass before a customer's full payment is due. Seller's description of a cash discount granted to buyers in return for early payment. Ownership of goods is transferred when the seller delivers goods to the carrier. Purchaser's description of a cash discount received from a supplier of goods. Difference between net sales and the cost of goods sold. Time period in which a cash discount is available. Ownership of goods is transferred when delivered to the buyer's place of business. 1Which is an appropriate method of preparing a common-size cash fl ow statement? B . Show each line item on the cash fl ow statement as a percentage of net revenue.
- Which of the following is used in computing cash payments for merchandise using the direct method? a.Net income b.An increase in accounts receivable c.An increase in accounts payable d.A decrease in accounts receivableIdentify the following items:a. The company’s inventory valuation methodb. The definition of cash equivalentsWhich of the following balance sheet items are commonly associated with the purchases and cash disbursements cycle? A Inventory and accounts payable B Purchases and accounts receivable C Cash paid to vendors D Cash received from the sale of inventory
- A company’s profi tability for a period would best be evaluated using the:C . statement of cash fl ows.What entry format is appropiate if sales returns and allowances occur on factored accounts? a. Sales returns and allowances xx Receivable from factor xx b. Reveivable from Factor xx Factoring expense xx c. Sales returns and allowances xx Factoring expense xx d. Reveivable from factor xx Accounts receivable xxME8Which of the following entries for goods sold by cash is correct? a) Cash Dr, AR Crb) AR Dr, Revenue Crc) Fees Earned, debit; Cash creditd) Cash, debit; Bank Cr