Question : 171.The accounts receivable turnover rate: A.Indicates how many times the receivables : 1237647

 

171.The accounts receivable turnover rate:   

A.Indicates how many times the receivables were converted into cash during the year.

 

B.Is computed by dividing average receivables by sales.

 

C.Indicates the average number of days a business waits to make collection on a credit sale.

 

D.Indicates the proportion of a company’s accounts receivable that the independent auditors were unable to confirm.

 

 

 

 

172.The accounts receivable turnover rate for Baldwin Corporation is 8, and for Basinger Company the turnover rate is 10. These statistics indicate that:   

A.Basinger collects its accounts receivable within 10 days on average; Baldwin collects its accounts receivable in 8 days on average.

 

B.Basinger writes off as uncollectible a greater percentage of its accounts receivable than does Baldwin Company.

 

C.Basinger collects its accounts receivable faster than does Baldwin Company.

 

D.Basinger makes on average 10 credit sales annually to each of its customers, while Baldwin makes 8 credit sales to each customer.

 

 

 

 

173.In regard to the accounts receivable turnover rate:   

A.The higher the better.

 

B.The lower the better.

 

C.In some industries it is better higher and in some industries it is better to be lower.

 

D.The auto industry prefers a lower rate.

 

 

 

 

174.Deegan Industries has an accounts receivable turnover rate of 8. Which of the following statements is not true?   

A.Deegan’s accounts receivable are more liquid than those of a business whose accounts receivable turnover rate is 5.

 

B.Deegan waits approximately 46 days to make collections of its credit sales. (Use 365 days in a year.)

 

C.Deegan writes off accounts receivable as uncollectible if they are over 45 days old.

 

D.Deegan’s net credit sales are about eight times the amount of its average accounts receivable.

 

 

 

 

175.Stanley, Inc.’s 2015 income statement reported net sales of $6,000,000, uncollectible accounts expense of $160,000, and net income of $700,000. Stanley’s average accounts receivable during 2015 amounted to $1,200,000. Using 360 days to a year, Stanley’s   

A.Accounts receivable turnover rate is approximately 4.4 times.

 

B.Accounts receivable turnover rate is approximately 2.5 times.

 

C.Average number of days to collect an account receivable is 72 days.

 

D.Accounts receivable turnover rate is approximately 2 times.

$6,000,000/$1,200,000 = 5; 360/5 = 72

 

 

 

176.Assuming a 365 day year, Gore Industries calculated an average of 53 days to collect its accounts receivable in 2015. During 2015, Gore’s accounts receivable turnover rate:   

A.Was approximately 6.89.

 

B.Was equal to 53 times its average accounts receivable.

 

C.Was approximately 0.15.

 

D.Can’t be determined from this information alone.

365/53 = 6.89

 

 

 

177.Dorfmann Industries has an accounts receivable turnover rate of 12. Which of the following statements is not true?   

A.Dorfmann’s accounts receivable are more liquid than those of a business whose accounts receivable turnover rate is 8.

 

B.Dorfmann waits approximately 30 days to make collections of its credit sales. (Use 365 days in a year.)

 

C.Dorfmann writes off accounts receivable as uncollectible if they are over 30 days old.

 

D.Dorfmann’s net credit sales are about twelve times the amount of its average accounts receivable.

 

 

 

 

178.Watins, Inc.’s 2015 income statement reported net sales of $5,000,000. Watin’s average accounts receivable during 2015 amounted to $450,000. Using 360 days to a year, Watin’s:   

A.Accounts receivable turnover rate is approximately 13.8 times.

 

B.Accounts receivable turnover rate is approximately 1.25 times.

 

C.Average number of days to collect an account receivable is 32 days.

 

D.Accounts receivable turnover rate is approximately 2 times.

$5,000,000/$450,000 = 11.1; 360 days/11.1 = 32 days

 

 

 

179.Assuming a 365 day year, Bush Industries calculated an average of 47 days to collect its accounts receivable in 2015. During 2015, Bush’s accounts receivable turnover rate:   

A.Was approximately 7.77.

 

B.Was equal to 47 times its average accounts receivable.

 

C.Was approximately 0.13.

 

D.Can’t be determined from this information alone.

365/47 = 7.77