Southern New Hampshire University
Module Four Homework
Please answer the following questions in paragraph form. Create in a Word document and upload.
1) What is receivables float? The receivable float is time between when an payment is made and the time the money is available for use.
2) What is payables float? The payables float is the company writes a check but the money is still in the company's account.
3) Name three ways to shorten the receivables cycle.
Three ways to shorten the receivables cycle is using a lock box, wire transfers or ACH transfers. "Lockbox banking is a service provided by banks to companies for the receipt of payment from
bank to bank domestically and internationally. Transfer takes about 2 days to hit another bank.
"ACH transfers are electronic, bank-to-bank money transfers processed through the Automated Clearing House Network" Lake 2022.
4)Give one example of receivables fraud.
lower price. Once the customers payment is received the employee pockets the money and pay only the lower priced invoice.
5) Name at least two different types of inventory valuation methods. Discuss the advantages and disadvantages of each method. LIFO and FIFO are two types of inventory valuation methods. FIFO is First-In-First-Out methods that believes the oldest piece of inventory is sold first. "FIFO is the most logical choice since companies typically use their oldest inventory first in the production of their goods" Tardi, 2022. On the other end is LIFO Last-in Last-Out method believes that the last unit bought is the first one sold. "LIFO is not realistic for many companies because they would not leave their older inventory sitting idle in stock" Tardi, 2022.
6) A controller must consider many factors to assist in the determination of capital asset
expenditures. Why is this planning important? Name two different accounting methods that might be used in the valuation of the expenditure. Discuss the advantages and disadvantages of both methods. It is important for any business to consider many factors in determining of capital assets expenses because they don't just have enough money to take on all new expenses. Two different accounting methods used in the valuation is the payback method and discounted cash flow method. "The payback method calculates the time period needed to pay back a project's original investment from the project's cash flows" Bragg, 2011. Pros of this method are the formula is easy to calculate, helps in a quicker project valuation, reduces risk or losses. The
Southern New Hampshire University
cons are "confuses recovery of capital with profitability" Bragg, 2011 and time value is not deemed. The Discounted cash flow method estimates the value of an investment that uses its future value. One of the major disadvantages is that this is an estimate and not true figures.
Referencesfi
ACH Transfers: What Are They and How Do They Work? (2022, November 4). Investopedia.
https://www.investopedia.com/ach-transfers-what-are-they-and-how-do-they-work-
4590120
Bragg, S. M. (2011). The Controller's Function: The Work of the Managerial Accountant (4th
ed.). Wiley Professional Development (P&T).
https://mbsdirect.vitalsource.com/books/9781118482537
FIFO vs. LIF