A 60-Day, 12% Note for $7,000, Dated April 15, Is

question 193

Multiple Choice

A 60-day, 12% note for $7,000, dated April 15, is received from a customer on account. The face value of the note is

• A) $6,860
• B) $7,140
• C) $7,840
• D) $7,000

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Definitions:

Days' Sales

An indicator of a company's efficiency in managing its inventory, it calculates the number of days it typically takes to sell the entire inventory.

Average Accounts Receivable

The mean value of accounts receivable over a given period, indicating the average amount owed to a company by its customers.

Inventory Turnover

A measure of how often a company's inventory is sold and replaced over a certain period, indicating the efficiency of inventory management.

Days' Sales

A financial ratio that measures the average time it takes a company to convert its inventory into sales.