Dimon Products' sales are expected to be $5 million this year, with 90% on credit and 10% for cash. Sales are expected to grow at a stable, steady rate of 10% annually in the future. Dimon's accounts receivable balance will remain constant at the current level, because the 10% cash sales can be used to support the 10% growth rate, other things held constant.
Answer the following statement true (T) or false (F)
False
Rationale: Accounts receivable will increase by 10%. That percentage increase would occur regardless of the level of the cash sales. Even if cash sales were 90%, receivables would still increase by 10% under the assumptions in the question.
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Inventory on hand is considered
A) a current asset. B) a current liability. C) a long-term asset. D) an expense.
You received a request for information that included a list of questions numbered 1 through 10. When you reply, ________
A) answer the first five questions only, as 10 is too many to address in one message B) include your answers ordered 1 through 10 as well C) reorder the questions according to their relative importance D) label your answers A through J, to downplay the inappropriately large number of questions asked E) answer only as many questions as you can fit on one page
Which section includes income derived from a firm's primary business activities as well as from activities peripherally related to operations? (The firm expects these sources of earnings to continue.)
a. income from continuing operations b. income, gains, and losses from discontinued operations c. extraordinary gains and losses d. retained earnings e. paid-in-capital
Proponents of the direct method prepare it by:
a. adding and subtracting some adjustments from net income. b. adding and subtracting cash flows from investing and financing activities. c. adjusting each line on the income statement to produce a cash-flow income statement. d. recording only cash transactions in the journal. e. None of the answers are correct.