This summary provides an overview of a sample homework quiz for a business finance class: - The document appears to be a sample quiz with 10 multiple choice questions covering topics like the operating cycle, cash flows, inventory management, and short-term investments. - One question is worked out in detail, calculating expected accounts receivable balances over time given sales amounts and a 30 day collection period. - The quiz aims to test students' understanding of concepts like how different business activities impact cash flows and working capital, and how to optimize inventory levels based on carrying and ordering costs.

1. This is a sample of the
Week 7 Homework ES Quiz
DeVry BUSN379
I had an A average and barely passed this course!!!
If you study these questions you’ll be learn the material and be much better
prepared than I was.
1. Question :
(TCO 2) Select any actions that do not affect the cash
account. Select all that apply:
Goods are sold on credit
An interest payment on a notes payable is made
Raw materials are purchased and paid for with credit
A new machine is purchased and paid for with the
business line of credit
Chapter 16, Pages 498-499
2. Question :
(TCO 2) Which one of the following will increase the operating
cycle?
increasing the accounts payable period
decreasing the accounts payable turnover rate
decreasing the cash cycle
increasing the accounts receivable turnover rate
increasing the inventory period
Chapter 16, Pages 500-502

2. 3. Question :
(TCO 2) Assume Green Leaf Nursery anticipated sales of $500
in the first quarter. Accounts receivable at the beginning of
the year was $300. Assuming a collection period of 30 days,
which is the approximate beginning balance for the second
quarter?
$550
$630
$250
$170
None of the above
Chapter 16, Pages 513-515
Answer: A 30-day collection period implies all receivables outstanding from
previous quarter are collected in the current quarter, and (90-30)/90 = 2/3
of current sales are collected.
Cash Collections = Beginning receivables + 2/3 of sales = $500 x 2/3 =
$333 + $300 = $633
Ending receivables = Beginning receivables + Sales – Collections = $300 +
500 - $633 = $167
The ending receivables of quarter 1 are the beginning of quarter 2.
4. Question :
(TCO 2) Best Environment Engineering wrote a check and
mailed it to the Electric Co. When the Electric Co. went to
deposit the check, it discovered that the bank was closed due
to flooding in the area. It was 5 days before the Electric Co.
could deposit the check from Best Environment Engineering.
Because the Electric Co.'s bank was closed:
Best Environment's collection float decreased.
the Electric Co.'s collection float decreased.
Best Environment’s disbursement float increased.
the Electric Co.'s disbursements float increased.
the ledger balance of Best Environment was less than it
would have been otherwise.

3. Chapter 17, Pages 531-533
5. Question :
(TCO 2) Which of the following statements is true? Select all
that apply:
The optimal credit policy minimizes the total cost of
granting credit.
There is an opportunity cost associated with not offering
credit.
An increase in a firm's average collection period generally
indicates that at least some customers are taking longer to
pay.
The costs of the credit application process and the costs
expended in the collection process are not carrying costs of
granting credit.
Character refers to the ability of a firm to meet its credit
obligations out its operating cash flows.
The optimal credit policy is the policy that produces the
largest amount of sales for a firm.
Chapter 17, Pages 545-548 and Lecture
6. Question :
(TCO 2) You place an order for 100 units of inventory Part A
at a unit price of $522. The supplier offers terms of 1/25, net
40. How much should you remit if you take the discount?
$52,200
$39,150
$51,678

4. None of the above
Chapter 17, Page 542
Answer: There is a 1 percent discount offered, with a 25 day discount
period. If you take the discount, you will only have to remit: Remittance =
(1 – .01)($52,200) where $52,200 is 100 units x $522/unit = $51,678
7. Question :
(TCO 2) Auto Parts sells 1,200 electric parts per week and
then reorders another 1,200 parts. If the relevant carrying
cost per electric part is $4 and the fixed order cost is $750,
what is the total carrying cost and the restocking cost,
respectively?
$2,400 and $39,900
$3,200 and $33,800
$2,400 and $39,000
$3,400 and $30,000
None of the above
Chapter 17, Page 553
Answer: Carrying costs = (1,200/2)($4) = $2,400
Restocking costs = 52($750) = $39,000
8. Question :
(TCO 2) Company ABC has expected sales of 12,000 units this
year, an ordering cost of $6 per order and carrying costs of
$1.60 per unit. What is the average inventory?
310 units
300 units
150 units
155 units
None of the above
Chapter 17, Pages 554-555

5. Answer: Sq. Rt. of (2 x 12000 x 6) / 1.60 = 300 units
Average Inventory = 300 units / 2 = 150 units
9. Question :
(TCO 2) The _________ is the time it takes to acquire and sell
inventory.
cash cycle
operating cycle
inventory period
accounts receivable period
accounts payable period
Chapter 16, Page 501
10. Question :
(TCO 2) List three examples of short-term investments.
commercial paper, certificates of deposit, money market funds