A Firm Has Arranged for a Lockbox System to Reduce

question 284

Multiple Choice

A firm has arranged for a lockbox system to reduce collection time of accounts receivable. Currently the firm has an average collection period of 43 days, an average age of inventory of 50 days, and an average payment period of 10 days. The lockbox system will reduce the average collection period by 3 days by reducing processing, mail, and clearing float. The firm's cash conversion cycle ________.

• A) increases by 3 days
• B) decreases by 3 days
• C) increases by 6 days
• D) decreases by 6 days

---

Definitions:

Classical Conditioning

A process of learning that takes place when there is a connection between an environmental trigger and a stimulus that occurs naturally.

Previously Neutral

Refers to a stimulus that initially elicits no innate response until it is paired with an unconditioned stimulus in the learning process of classical conditioning.

Conditioned Response

A learned response to a previously neutral stimulus that has become associated with an unconditioned stimulus through conditioning.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response that is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.