While Preparing Its Bank Reconciliation,Mart Company Determined That Its Bank

question 101

Multiple Choice

While preparing its bank reconciliation,Mart Company determined that its bank had collected for the company an account receivable in the amount of $950.The bank deducted a $15 collection fee.Which of the following shows the effect of the above event on the financial statements?

• A) Choice A
• B) Choice B
• C) Choice C
• D) Choice D

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Definitions:

Operating Cycle

The time period between the acquisition of inventory by a company and the receipt of cash from the sale of that inventory.

Payables Turnover

A financial efficiency ratio that measures how quickly a company pays off its suppliers by comparing net purchases to average accounts payable.

Inventory Turnover

Inventory Turnover is a measure of how often a company sells and replaces its stock of goods within a certain period, indicating efficiency in managing inventory.

Cash Cycle

Cash Cycle, also known as the cash conversion cycle, measures the time it takes a company to convert resource inputs into cash flows.