FA Mod 5 Accounts receivable inventory accounts payable practice exam questions


FA Mod 5 Accounts receivable inventory accounts payable practice exam...

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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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