Use the Selected Data from Pinecrest Company's Financial Statements to Answer

question 116

Multiple Choice

Use the selected data from Pinecrest Company's financial statements to answer the following question. $$\begin{array} { l r r } & \underline { 2017 } & \underline { 2016 } \\\text { Cash } & \$ 22,000 & \$ 14,000 \\\text { Accounts receivable } & 42,000 & 16,000 \\\text { Merchandise inventory } & 22,000 & 83,000 \\\text { Prepaid expenses }& \underline { 23,000 } & \underline { 18,000 } \\\text { Total current assets } & \underline { \mathbf { \$ 1 0 9 , 0 0 0 } } & \underline { \mathbf { \$ 1 3 1 , 0 0 0 } } \\\\\text { Total current liabilities } & \$ 65,000 & \$ 72,000 \\\text { Net credit sales } & 221,000 & 326,000 \\\text { Cost of goods sold } & 168,000 & 299,000 \\\text { Net cash flow from operating activities } & 16,000 & 29,000\end{array}$$ ​
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-Refer to the data for Pinecrest Company. ?
Competitors in Pinecrest Company's industry have an average accounts receivable turnover of 10.8 times.Pinecrest reported accounts receivable at December 31, 2017, of $42,000 and has normal credit terms requiring payment within 30 days.Pinecrest's accounts receivable turnover for 2017 is:?

• A) probably indicating that the company probably has stricter credit terms and policies than the industry as a whole, which may repel potential buyers.
• B) of no value to bankers and other creditors.
• C) less efficient in its collection policies in 2017 than the industry as a whole.
• D) less than the industry, which means that its customers are paying on their accounts in a more timely manner than are customers reflected by the industry average.

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Definitions:

Attribution

The process by which individuals explain the causes of behavior and events.

Self-Serving Bias

The tendency to explain personal success by internal causes and personal failures by external causes.

Fundamental Attribution Error

A cognitive bias where individuals attribute others' actions to their character rather than external factors.

Spillover Effect

The influence of an event or behavior in one context spreading into another area, often unintentionally.