Hello,

Please see answers below and let me know if you think they are correct. Please explain and show work (why they are or are not correct). Thanks :) __D__ 1. Your book balance for cash is $811. You have an outstanding deposit of $210 and three outstanding checks totaling $316. What is your available cash balance? a. $495 b. $705 c. $917 d. $1,021

The outstanding checks would have already been deducted from the book. __C__ 2. Which one of the following types of delay refers to the time it takes a firm to sort the mail, prepare the checks received for deposit, and deliver the deposit to the bank? a. availability b. mailing c. processing d. disbursement

Processing Delay is the delay. A processing delay may involve the time between receiving a payment and depositing it in the bank or between a customer requesting a product and that product being shipped. ____C____ 3. Which one of the following statements concerning lockboxes is correct? a. Lockboxes offer no benefit since the Check Clearing Act for the 21st Century became law. b. Lockbox payments are generally deposited into a firms bank account prior to the firm recording that payment on the customers account. c. Lockboxes are generally used in place of a cash concentration account. d. The check payee picks up and processes checks from its lockboxes multiple times during the day. ____B___ 4. Which one of the following motives is used to refer to the holding of cash so a firm can benefit from an unforeseen investment opportunity? a. precautionary b. speculative c. transaction ____C____ 5. Generally speaking, when is money deposited into a controlled disbursement account? a. never b. on a monthly basis only c. whenever excess funds are available in the master account d. as needed to cover checks presented for payment ____D____ 6. Which one of the following characteristics generally applies to commercial paper? a. maturities of 90 days or less b. high level of liquidity c. active secondary market d. unsecured ____D____ 7. A firm has credit terms of 1/7, net 25. What is the net credit period? a. 1 b. 7 c. 18 d. 25 ____D____ 8. A firm offers credit terms of 1/5, net 20. What is the effective annual rate if a customer foregoes the discount on a $3,000 purchase? a. 22.50 percent b. 23.33 percent c. 24.36 percent d. 27.71 percent

20 5 = 15

365 / 15 = 24.333

.01 / .99 = 0.010101

1.010101^24.333 1 .2771 = 27.71

____D____ 9. Which of the following affect the credit period? I. account size II. product cost III. competition IV. perishability a. I and II only b. I and III only c. II, III, and IV only d. I, II, III, and IV ____B____ 10. A firm has annual sales of 21,000 units at an average selling price of $54 a unit. The carrying cost per unit is $2.70. The fixed cost per order is $51. The inventory is allowed to fall to zero before it is restocked. What is the EOQ? a. 834 units b. 891 units c. 906 units d. 923 units

[ ((2 * 21,000) * 51) / 2.70 ]^{1 / 2} = 891