Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Net Sales

Financial Accounting

4. Merchandising Operations

Net Sales

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Multiple Choice

Which of the following is a key component of managing working capital?

Calculating earnings per share (EPS)

Monitoring accounts receivable to ensure timely collection of net sales

Issuing new shares of common stock

Recording depreciation expense on fixed assets

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Verified step by step guidance

Understand the concept of working capital management: Working capital refers to the difference between current assets and current liabilities. Managing working capital involves ensuring that a company has sufficient liquidity to meet its short-term obligations while optimizing the use of its current assets.

Identify the key components of working capital: These typically include managing cash, accounts receivable, inventory, and accounts payable. The goal is to maintain a balance that supports operational efficiency and financial stability.

Focus on accounts receivable: Monitoring accounts receivable is crucial because it ensures that customers pay their invoices on time, which directly impacts cash flow and liquidity. Delayed collections can lead to cash shortages and disrupt operations.

Evaluate the options provided in the problem: Calculating earnings per share (EPS), issuing new shares of common stock, and recording depreciation expense on fixed assets are not directly related to managing working capital. These activities pertain to other aspects of financial management, such as profitability analysis, financing, and asset valuation.

Conclude that monitoring accounts receivable to ensure timely collection of net sales is a key component of managing working capital, as it directly affects the company's ability to maintain liquidity and operational efficiency.