Question:* After goods have been shipped, what must be sent to the buyer?
Answer: • The invoice
Question:* When computing an average balance of accounts receivable one should use
Answer: • every day of the year
Question:* Why are there conflicts between credit and sales?
Answer: • The function of sales is contingent upon the credit department granting credit to the customer
Question:* What is an advantage of a seller deciding to offer its goods and services on credit?
Answer: • (All of these)
Question:* What is a revolutionary solution to issues in billing accuracy?
Answer: • Electronic billing
Question:* Another name for an account receivable is
Answer: • a trade receivable
Question:* True or False? Aging is often broken up into several categories such as current, 1-30 days past due, 31-60 days past due etc.
Answer: • True
Question:* What is bankruptcy?
Answer: • Bankruptcy occurs when a business, person, or legal entity cannot repay debts owed to its creditors
Question:* True or False? Sometimes a company will provide a cash discount in order to incentivize a customer to pay in a timely fashion.
Answer: • True
Question:* True or False? Invoices are typically used by the business and deliviered to the customer for an agreed payment time.
Answer: • True
Question:* True or False? A debtor can pay before its due date.
Answer: • True
Question:* True or False? The account payable for one company corresponds to another company's account receivable.
Answer: • True
Question:* True or False? With the help of aging one can usually detemine uncollectable accounts receivable.
Answer: • True
Question:* Which of the following is a good rule to follow in accounts receivable?
Answer: • Print and mail invoices as quickly as possible; the sooner an invoice is sent, the sooner you get paid
Question:* A subsidiary ledger for accounts receivable has the information on which of the following
Answer: • (All of these)
Question:* An example of nontrade receivables are
Answer: • (All of these)
Question:* What is the defintion of accounts receivable?
Answer: • A claim of payment for a business for services it had done for a particular customer or client
Question:* What is another term for a supplier?
Answer: • Vendor
Question:* What do terms of an invoice suggest?
Answer: • Invoice terms indicate when the bill is to be paid
Question:* Which are examples of document tools that are valuable to accounts receivable?
Answer: • Electronic data interchange, and optical character recognition
Question:* What is an example of a modern software that handles accounts payable?
Answer: • Quickbooks
Question:* What must a debtor file in a voluntary bankruptcy?
Answer: • A petition for liquidation
Question:* A common payment term for accounts receivable is:
Answer: • 30 days
Question:* How should a collections fax be addressed to be used to its greatest advantage?
Answer: • They should be addressed to the appropriate party
Question:* True or False? A secured creditor is someone who that has a legal right to the company's assets.
Answer: • True
Question:* What does GAAP stand for?
Answer: • Generally Accepted Accounting Principles
Question:* In order to secure you a line of credit, you could use accounts receivable as _______.
Answer: • collateral
Question:* What is the last resort when it comes to collections?
Answer: • Use a third-party billing agency who may charge a percentage of the total recovered
Question:* The title of a good transfers to the buyer at the shipping point. This is likely an example of a/an _____ shipping point.
Answer: • FOB
Question:* When you have converted valuable financial data to an authorized, unreadable state, what has happened to it?
Answer: • It has been encrypted
Question:* What terms do sellers prefer to sell to customers?
Answer: • Cash-in-advance, or CIA
Question:* What is one downside to electronic billing?
Answer: • The setup cost
Question:* Which of the following is an example of an accounts receivable?
Answer: • (All of these)
Question:* Sometimes when an account receivable is not paid a business can turn to
Answer: • (All of these)
Question:* True or False? Net sale on a shipment of goods is the total amount of goods sold minus the non-acceptable goods sold to a customer
Answer: • True
Question:* What does “DSO” stand for, and how is it calculated?
Answer: • Day sales outstanding. Gross receivables / (Annual net sales / 365)
Question:* Why is the allowance method used over the direct write off method when dealing with uncollectible accounts receivable?
Answer: • The accounts receivable will be decreased on the balance sheet using allowance for doubful accounts
Question:* How often is a bad debt expense closed?
Answer: • 1 year
Question:* Who is the best contact for receiving information about legal issues and credit?
Answer: • National Association of Credit Management
Question:* Account receivables are categorized as current assets assuming they are due within
Answer: • 1 year
Question:* True or False? A higher accounts receivable turnover ratio is generally favorable.
Answer: • True
Question:* Which of the following are two common bookkeeping methods?
Answer: • the allowance method and direct write-off method
Question:* An account receivable turnover ratio is 5, while the company sales were $100,000. What is average balance of accounts receivable?
Answer: • $20000
Question:* What can happen if a company fails to read an invoice?
Answer: • Vendors may introduce clauses that companies cannot agree to
Question:* Why is it central to the life of a business that sales and credit departments work together?
Answer: • Selling an item to the right party at the right price is a team effort
Question:* What three important documents, and following material, are critical in a financial statement for credit evaluation?
Answer: • Income statement, balance sheet, cash flow statement, and footnotes
Question:* What function do letters of credit serve?
Answer: • They are documents stating the buyers intent to pay the seller
Question:* The benefit of a vague invoice is what?
Answer: • There is no benefit. Vague invoices cause internal billing problems.
Question:* When a customer has no credit history, what is a possible option to make a sale?
Answer: • Security interest
Question:* What type of customers are letters of credit most useful for?
Answer: • International
Question:* Which method is required by the GAAP?
Answer: • Allowance method
Question:* Compute the accounts receivable collection period if a company had $400,000 net credit sales and its accounts receivable balance was $30,000.
Answer: • $30,000*365/$400,000
Question:* Compute the accounts receivable collection period if a company had $500,000 net credit sales and its accounts receivable balance was $40,000.
Answer: • $40,000*365/$500,000
Question:* What are two examples of documents to carry when visiting a customer for a collection?
Answer: • A statement of the customer's account, and documentation of all disputes
Question:* Chapter 7 bankruptcy entails what activity?
Answer: • The liquidation of a business
Question:* A supplier is an unsecured creditor when
Answer: • a supplier provides goods or services to a company through credit.
Question:* Company X has sales of $5,000,000 and its average balance for accounts receivable was $50,000. What is the accounts receivable turnover ratio?
Answer: • 100
Question:* What is an excellent two-pronged approach to collections?
Answer: • Contact via telephone, and document everything
Question:* What is the standard calculation for accounts receivable turnover?
Answer: • (Net Credit Sales) / (Average Accounts Receivable)
Question:* What data standard is competing with EDI, and what does it mean?
Answer: • XML, eXtensible MarkUp Language
Question:* How should sales staff be measured to assure their performance is high?
Answer: • Measure them based on their return on assets
Question:* When looking at a company's accounting records, obtaining the accounts receivable will
Answer: • will not affect the net income
Question:* True or False? A postdated check can be deposited and is considered money.
Answer: • True
Question:* What is chapter 11 bankruptcy?
Answer: • Chapter 11 bankruptcy is a reorganization of a business that allows it to continue operation.
Question:* What is the purpose of antitrust laws?
Answer: • Antitrust laws prevent price-fixing
Question:* What is the ISO standard for financial services messaging?
Answer: • ISO 20022
Question:* There are two tests for insolvency. What are they?
Answer: • The balance Sheet Test, and the Equity Test
Question:* There are two tests for insolvency. What are they?
Answer: • The balance Sheet Test, and the Equity Test
Question:* How do you calculate the days' sales in accounts receivable?
Answer: • Divide the number of days in a calendar year by the accounts receivable turnover ratio
Question:* You have a customer whose financials are deteriorating and credit limit is likely to be reduced. What is the best course of action?
Answer: • An unscheduled customer visit
Question:* True or False? Signing a contract always creates a liabiity or asset.
Answer: • False
Question:* True or False? According to the IRS, bad debts can always be used as an allowable deduction when computing profits for a company.
Answer: • False
Question:* What might a company do to increase their float if they are deceitful?
Answer: • Mail payment to the wrong part of a company
Question:* If a company is to be audited for credit approval, what three statements must be provided?
Answer: • Audited statements, reviewed statements, compiled statements
Question:* Who is chapter 12 bankruptcy intended for?
Answer: • Family farmers or fisherman
No comments:
Post a Comment