Accounts Receivable and Credit Management Quiz
Test your knowledge on credit management with questions covering DSO, AR turnover, credit policies, aging reports & more!
#1
What does Days Sales Outstanding (DSO) measure?
Inventory turnover rate
Efficiency of accounts payable
Efficiency of accounts receivable
Profitability ratio
#2
Which of the following is a primary objective of credit management?
Maximizing inventory turnover
Minimizing cash flow
Minimizing bad debt losses
Maximizing accounts payable
#3
What is the purpose of a credit application?
To calculate inventory turnover
To assess a customer's creditworthiness
To determine accounts payable
To analyze profitability ratio
#4
Which of the following is a disadvantage of offering credit to customers?
Increased sales revenue
Enhanced customer loyalty
Decreased risk of bad debts
Tying up funds in accounts receivable
#5
What is the formula to calculate the Accounts Receivable Turnover ratio?
Net credit sales / Average accounts receivable
Total revenue / Average accounts receivable
Total revenue / Total assets
Net credit sales / Total assets
#6
Which of the following is NOT a factor that affects credit policy decisions?
Credit standards
Collection policy
Economic conditions
Inventory valuation
#7
What does the term 'aging schedule' refer to in credit management?
A report showing the historical aging of accounts payable
A report showing the historical aging of accounts receivable
A report showing the profitability ratio
A report showing inventory turnover rate
#8
Which of the following is a strategy for minimizing accounts receivable collection time?
Offering longer credit terms
Implementing stricter credit policies
Delaying invoice issuance
Reducing early payment discounts
#9
What does the Aging of Accounts Receivable report show?
Payment history of customers
Inventory turnover rate
Efficiency of accounts payable
Profitability ratio
#10
What is the purpose of a credit limit?
To determine inventory valuation
To set the maximum amount of credit extended to a customer
To calculate accounts receivable turnover
To analyze the efficiency of accounts payable
#11
What is the purpose of credit analysis?
To determine the inventory turnover ratio
To assess the creditworthiness of customers
To calculate accounts receivable turnover
To analyze the efficiency of accounts payable
#12
What is the effect of a shorter accounts receivable turnover ratio?
It indicates efficient management of accounts receivable.
It indicates ineffective management of accounts receivable.
It has no impact on the business.
It decreases profitability.
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