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Updated on: 01 May 2018, 02:11
Originally posted by VyshakhR1995 on 22 Apr 2017, 03:13.
Last edited by Bunuel on 01 May 2018, 02:11, edited 1 time in total.
Last edited by Bunuel on 01 May 2018, 02:11, edited 1 time in total.
Renamed the topic and edited the question.
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E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
25%
(medium)
Question Stats:
77% (02:16) correct
23%
(02:21)
wrong
based on 320
sessions
History
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Time
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Not Attempted Yet
A computer wholesaler increased its cash flow last year by accelerating the collection of its accounts receivables, money owed to the company by retailers that had purchased products but not yet paid for them, which had accumulated because the company had neglected to follow up with the retailers and seek payment. Last year, the wholesaler hired additional staff for the purpose of improving the collection of these receivables and, even with the increased expenses from hiring the new employees, the company’s net cash flow increased by 20 percent from the prior year because it successfully collected much of its accumulated receivables. The company proposes to increase its cash flows by a similar amount in the current year by continuing its more vigorous collection efforts.
Which of the following, if true, most clearly identifies a weakness in the computer wholesaler’s proposal to improve net cash flow in the current year?
A. The wholesaler projects sales growth for the current year that is only a marginal increase over sales growth for last year.
B. Last year, the wholesaler retained the services of an external collection agency, in addition to its internal staff, to collect payments for the accounts most egregiously in arrears.
C. The retailers that showed the highest propensity in the past to pay late are the ones most likely to do so in the future.
D. Net cash flow and net profits are different accounting measures, and an increase in one may not correspond to an increase in the other.
E. The earlier collection efforts greatly reduced the amount owed by the retailers at the beginning of the current year
Which of the following, if true, most clearly identifies a weakness in the computer wholesaler’s proposal to improve net cash flow in the current year?
A. The wholesaler projects sales growth for the current year that is only a marginal increase over sales growth for last year.
B. Last year, the wholesaler retained the services of an external collection agency, in addition to its internal staff, to collect payments for the accounts most egregiously in arrears.
C. The retailers that showed the highest propensity in the past to pay late are the ones most likely to do so in the future.
D. Net cash flow and net profits are different accounting measures, and an increase in one may not correspond to an increase in the other.
E. The earlier collection efforts greatly reduced the amount owed by the retailers at the beginning of the current year
11 May 2018, 03:23
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VyshakhR1995
Which of the following, if true, most clearly identifies a weakness in the computer wholesaler’s proposal to improve net cash flow in the current year?
A. The wholesaler projects sales growth for the current year that is only a marginal increase over sales growth for last year.
B. Last year, the wholesaler retained the services of an external collection agency, in addition to its internal staff, to collect payments for the accounts most egregiously in arrears.
C. The retailers that showed the highest propensity in the past to pay late are the ones most likely to do so in the future.
D. Net cash flow and net profits are different accounting measures, and an increase in one may not correspond to an increase in the other.
E. The earlier collection efforts greatly reduced the amount owed by the retailers at the beginning of the current year
A. Growth rate is out of scope. We are concerned with cash collection.
B. It depends on the amount to be paid by these retailers more than the staff employed.
C. It depends on the amount to be paid by these retailers. If they owe less, it doesn't matter. Majority of amount can be collected from others
D. Comparison between growth rate and profits is out of scope. We are concerned with cash collection.
E. If amount of receivables is less in the market, then there is no question of collecting more money. Correct
02 Jul 2020, 07:52
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Never choose an answer that introduces a new term, which is not part of the main argument ( ex: D. "net income" )
Answer: E
Answer: E
