Question 15 Other things held constant, which of the following would tend to red
ID: 2665996 • Letter: Q
Question
Question 15
Other things held constant, which of the following would tend to reduce the cash conversion cycle?
Answers
Carry a constant amount of receivables as sales decline.
Place larger orders for raw materials to take advantage of price breaks.
Take all discounts that are offered.
Continue to take all discounts that are offered and pay on the net date.
Offer longer payment terms to customers.
Question 16
Which of the following statements concerning the cash budget is CORRECT?
Answers
Depreciation expense is not explicitly included, but depreciation's effects are reflected in the estimated tax payments.
Cash budgets do not include financial items such as interest and dividend payments.
Cash budgets do not include cash inflows from long-term sources such as the issuance of bonds.
Changes that affect the DSO do not affect the cash budget.
Capital budgeting decisions have no effect on the cash budget until projects go into operation and start producing revenues.
Question 17
Which of the following items should a company report directly in its monthly cash budget?
Answers
Its monthly depreciation expense.
Cash proceeds from selling one of its divisions.
Accrued interest on zero coupon bonds that it issued.
New shares issued in a stock split.
New shares issued in a stock dividend.
Other things held constant, which of the following would tend to reduce the cash conversion cycle?
Answers
Carry a constant amount of receivables as sales decline.
Place larger orders for raw materials to take advantage of price breaks.
Take all discounts that are offered.
Continue to take all discounts that are offered and pay on the net date.
Offer longer payment terms to customers.
Explanation / Answer
15. ANSWER : Place larger orders for raw materials to take advantage of price breaks. 16. ANSWER : Depreciation expense is not explicitly included, but depreciation's effects are reflected in the estimated tax payments. 17. ANSWER : Cash proceeds from selling one of its divisions.