Which of the following is true of these credit terms: $3/15,$ n$/30?$

a$.15$ percent discount if the payable is paid within $3$ days of the invoice date

b$.3$ percent discount if the payable is paid in the period between $15$ days and $30$ days after the invoice date

c$.3$ percent discount if the payable is paid within $15$ days of the invoice date

d$.30$ percent discount if cash is paid on the sale date and $15\%$ discount if paid $3$ days after the invoice date

$7.$

When reviewing its budgets, including the cash budget, management of Transcend Inc. have considered bestcase

and worst$-$case scenarios. As they completed their analysis, it was decided because of the possibility of

unexpected repairs and unanticipated higher labor costs to add another $$30,000$ to the amount of the target cash

balance to maintain throughout the year. The reason for this action would be which of these motives for holding

cash?

a$.$ transaction motive

b$.$ opportunity cost mitigation motive

c$.$ precautionary motive

d$.$ speculative motive

$8.$

A large retailer has more than $$100$ million of cash and cash equivalents on its balance sheet. Which of the

following would not be part of the cash equivalents?

a$.$ cash in banks $($checking account balances$)$

b$.$ US Treasury bond maturing in two years

c$.$ receivables from a bank that processes credit card payments

d$.$ commercial paper

$9.$

An account receivable is created when $\_\_\_\_\_\_\_\_.$

a$.$ a customer pays its bill

b$.$ a company accepts a credit card, such as VISA or MasterCard

c$.$ a company sells to a customer on an open account

d$.$ a company sells to a customer only on a cash basis

$10.$

Jackson$$s Moonshine LLC has a receivables collection period of $47$ days. Which the following would be

reasonable conclusions?

a$.$ Jackson$$s Moonshine LLC is most likely experiencing serious liquidity issues.

b$.$ Jackson$$s Moonshine LLC is most overinvested in marketable securities$.$

c$.$ If the industry average is $31$ days, Jackson$$s management should attempt strategies that will lower their

receivables collection period.

d$.$ If the industry average is $53$ days, Jackson$$s management should attempt strategies that will raise their

receivables collection period.

$11.$

Two Way Power Ltd$.(2$WP$)$ stocks an inventory item, BB$3,$ that is projected to be in great demand over the next

$12$ months. In discussing its sales forecasts with its suppliers, a reasonable estimate shows that $2$WP could lose

about $$30,000$ of sales in month $3$ due to inventory financing difficulties. Which, if any, of the following inventory

costs would be affected by this development?

a$.$ purchase cost

b$.$ carrying costs

c$.$ ordering costs

d$.$ stockout costs

e$.$ none of these costs because loss of sales is not an inventory cost

$12.$

If a company has significant inventory in each element of the value chain, it most likely is descriptive of $\_\_\_\_\_\_\_\_.$

a$.$ the cost of goods sold of a retailer

b$.$ the inventory balances held by wholesalers and service firms

c$.$ the materials, work in process, and finished goods of a manufacturer

d$.$ the inventory on the shelves of an e$-$commerce retailer