TRUE OR FALSE FOR THESE QUESTIONS

1) An Aging of Accounts Receivable report can aid management in managing risk associated with granting credit by identifying customers who are slow in paying their obligations.

2) Among the benefits of lock-box systems for companies that use them are increased handling of cash by the company, lower cost and greater security.

3)

The number of days sales in inventory has decreased from 30 days to 20 days during the last two quarters. This reduction should generally be viewed as an improvement in inventory management.

4)

Lawrence Company current has the following amounts on its Balance Sheet: Cash of $20,000, Accounts Receivable of $30,000, Inventory of $10,000, Property, Plant & Equipment of $40,000, Accounts Payable of $35,000, Long-term Mortgage Payable of $25,000 and Equity of $40,000. Based upon this information, Lawrence Companys working capital would be $25,000.

5) Lawrence Company currently has cash of $20,000, Accounts Receivable of $25,000, Property, Plant & Equipment of $50,000 and Accounts Payable of $60,000. Based on this information, it can be said that Lawrence Company has an adequate amount of working capital

6) A company has a $25,000 accounts payable that is currently due. An appropriate source of financing to settle this obligation would be a 24-month installment loan.