Working Capital Management

question 34

Multiple Choice

Working capital management:

• A)ensures that sufficient equipment is available to produce the amount of product desired on a daily basis.
• B)ensures that long-term debt is acquired at the lowest possible cost.
• C)ensures that dividends are paid to all stockholders on an annual basis.
• D)balances the amount of company debt to the amount of available equity.
• E)is concerned with managing day to day cash flow.

---

Definitions:

Bad Debt Expense

An expense reported on the income statement, representing the estimate of uncollectible accounts receivable.

Accounts Receivable

Money owed to a company by its clients or customers for goods or services delivered but not yet paid for.

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of accounts receivable that a company does not expect to collect.

Uncollectible Receivables

Amounts due from customers that are considered unattainable and likely to never be collected.