Objective type questions on accounts receivables

1.  Modos Company has deposited $2,000 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial balance was $400. If $1,600 of its customers checks have been cleared but only $600 of its own, calculate its float.

1. $200
2. $400
3. $300
4. $700

2.   Which of the following is not a method of speeding up collections?

1. Lock-box system
2. Regional collection centers
3. Extended disbursement float
4. All of the above are methods for speeding up collections

3.  A call provision, which allows the corporation to force an early maturity on a bond issue, usually contains all but which of the following characteristics?

1. Most bonds must be outstanding at least 5 years before being called.
2. After the call date, the call premium tends to decline over time.
3. The provision typically calls for debt conversion into common stock.
4. The corporation will pay a premium over par for the bonds.

4.  A firm has beginning inventory of 300 units at a cost of $11 each. Production during the period was 650 units at $12 each. If sales were 700 units, what is the value of the ending inventory using LIFO?

1. $2,750
2. $3,250
3. $3,300
4. $2,550

5.  The IF for the future value of an annuity is 4.5 at 10% for 4 years. If we wish to accumulate $8,000 by the end of 4 years, how much should the annual payments be?

1. $2,500
2. $2,000
3. $1,778
4. none of the above

6.  In examining the liquidity ratios, the primary emphasis is the firm's

1. ability to effectively employ its resources.
2. overall debt position.
3. ability to pay short-term obligations on time.
4. ability to earn an adequate return.

7.  The return measure that an investor demands for giving up current use of funds, without adjusting for purchasing power changes or the real rate of return, is the

1. risk premium
2. inflation premium
3. dividend yield
4. discount rate

8.  A bond with a coupon rate of 7.5%, maturing in 10 years at a value of $1,000 and current market price of $776 will have a current yield of

1. 11.3%
2. 10.2%
3. 9.7%
4. 8.5%

9.  An annuity may be defined as

1. a payment at a fixed interest rate at the end of one year.
2. a series of consecutive payments of increasing amounts.
3. a series of consecutive payments of equal amounts.
4. a series of consecutive payments of decreasing amounts.

10. With no growth in dividends, the value of common stock is determined just like

1. bonds
2. preferred stock.
3. the present value of an annuity.
4. the future value of an annuity.