SOLVED

11) Which of the following usually increases as sales revenue increases? A) Long-term liabilities B) Depreciation C) Accrued salaries D) Capital assets E) Accounts receivable 12) If customers pay their invoices on average in 30 days and the company is projecting a 12% increase in its sales revenue next year from its current level of $5,657,500, how much more will it be carrying in accounts receivable next year? A) $3,100 B) $94,292 C) $55,800 D) $93,000 E) $1,131,500 13) The opening balance of accounts receivable in October is $255,000. Sales for the month are forecast to be $600,000 of which 55% are on credit. If customers pay in full in one month, what cash will be received from customers in October? A) $270,000 B) $525,000 C) $585,000 D) $384,750 E) $465,000 14) The Company receives 20% of its monthly sales immediately in cash, 70% in the following month and the balance in the month after that. If it had sales of $1.2 million in April, $1 million in May, $1.4 million in June and $1.3 million in July, how much cash is received from its customers in July? A) $1.1 million B) $1.24 million C) $1.34 million D) $960,000 E) $1.94 million 15) A Cash budget is a document that is prepared A) According to the accrual method of accounting B) On the basis of the accounting matching principal C) Based on book values of assets D) To meet external auditing requirements E) To reflect the timing of Cash flows 16) Top Printing Company has credit sales of $500,000 in June, $700,000 in July, $850,000 in August, and $500,000 in September. It collects 50% of its credit sales in the month following the sale and 25% in each of the months thereafter. What is Top Printing’s cash collection in September? A) $725,000 B) $1,225,000 C) $688,000 D) $1,288,000 E) $975,000 17) The opening Cash balance in July for Markel Ltd. is expected to be $50,000. Sales revenue for July, August and September is projected at $400,000, $450,000 and $420,000 of which 80% are on credit. 60% of credit sales are collected in the month following the sale and the rest in the month after that. Collections from the previous quarter, will add $280,000 to July and $60,000 to August. Rent, salaries and taxes are $260,000 per month. Accounts payable are equal to 30% of sales and are paid in the month following. Payables from the previous quarter equal $120,000. What is the projected closing Cash balance for Markel at the end of the quarter? A) ($261,000) B) $29,000 C) $79,000 D) $199,000 E) $599,000 18) The disadvantage in holding cash balances, is that cash A) Is not easily transferred electronically B) Cannot be used to pay offshore invoices C) Cannot be easily secured against theft D) Can be easily counterfeited E) Earns no, or low, return for the business 19) Repayment of a mortgage is A) A source of cash inflow from financing activities B) A source of cash outflow from financing activities C) A source of cash inflow from investment activities D) A source of cash outflow from investment activities E) The source of cash outflow from operating activities 20) An increase in accumulated depreciation is A) Not a source of cash inflow or outflow B) A source of cash inflow from financing activities C) A source of cash outflow from financing activities D) A source of cash inflow from operating activities E) A. source of cash outflow from operating activities