By NEAS - 8/1/2018 10:00:20 PM
FA Module 5 Accounts receivable inventory accounts payable practice exam questions
(The attached PDF file has better formatting.)
In 20XX, a firm pays 344 to suppliers for purchases of inventory, its gross profit margin is 68%, and 55% of its sales are on credit. The balance sheet figures for 20XX are
January 1, 20XX December 31, 20XX
Accounts receivable 134 120
Inventory
132 165
Accounts payable 167 178
Question 5.1: Inventory bought
How much inventory was bought during the year?
Answer 5.1: 344 + (178 – 167) = 355
(inventory bought = payments to suppliers + Δ(accounts payable) )
Question 5.2: Cost of goods sold
What is the cost of goods sold during the year?
Answer 5.2: 355 – (165 – 132) = 322
(cost of goods sold = inventory bought during year – Δ(inventory) )
Question 5.3: Inventory turnover
What is the inventory turnover for the year?
Answer 5.3: 322 / ( (165 + 132) / 2) = 2.168
(inventory turnover = cost of goods sold / average inventory)
Question 5.4: Net revenue
What is the net revenue during the year?
Answer 5.4: 322 / (1 – 68%) = 1,006.25
(net revenue = cost of goods sold / (1 – gross profit margin) )
Question 5.5: Receivables turnover
What is the receivables turnover for the year?
Answer 5.5: (1,006.25 × 55%) / ( (134 + 120) / 2) = 4.358
(receivables turnover = credit sales / average accounts receivable)
Question 5.6: Cash received from customers
What is the cash received from customers during the year?
Answer 5.6: 1,006.25 – (120 – 134) = 1,020.25
(cash received from customers = net revenue – Δ(accounts receivable) )
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