Currently, Your fiRm Requires 3 Days to Process the Cheques

question 370

Multiple Choice

Currently, your firm requires 3 days to process the cheques received from customers. The average mail time associated with these payments is 4 days and the cheque clearing time is 1 day. If your
firm adopts a lockbox system, the mail time will be cut in half. In addition, if employees are
Reassigned, cheques could be processed in 1 day. How long will your collection time be if both the
Lockbox system and the job reassignments are implemented?

• A) 2.5 days
• B) 3.0 days
• C) 4.0 days
• D) 5.5 days
• E) 7.0 days

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Definitions:

Insurance Policy

A contract between an individual or entity and an insurance company, detailing the terms for payment of premiums and the provisions of coverage.

Adjusting Entries

Journal entries made at the end of an accounting period to update certain accounts and ensure they reflect the true financial position of a company.

Adjusting Entries

These are journal entries made in the accounts to adjust revenues and expenses to the period in which they actually occurred, ensuring that financial statements reflect accurate figures.

Estimated Items

Financial statement items that require a degree of estimation by management to determine the appropriate values to record.