1,

When an entity invests solely to replace worn out equipment they also often end up incorporating new technology. This is considered as:

irrelevant because if the old equipment was satisfactory then no improvement is necessary.

a bonus for the entity.

a waste of money because more advanced equipment is often more expensive.

a necessity in the replacement decision.

2.

Examples of cash outflows from an entity do not include:

purchase of materials.

payment of salaries and wages.

payment of taxes.

sale of unused assets.

3.

A change in the average inventory turnover period from 58 days to 76 days means that inventory is:

being purchased for cash.

being sold more slowly.

none of the options are true.

being sold more quickly.

4.

The most important source of spontaneous short-term funding for entities is normally:

bank overdrafts.

trade credit.

ordinary shares.

accrued wages.

5.

The level of debtors is determined by:

the level of credit sales.

all of the options are used to determine the level of debtors.

credit policies.

collection policies and procedures.