Module Four Homework
1) What is receivables float?
Receivables float is the period that elapses between the time that a payment is sent by the
customer and the time that the payment is received by the creditor and is usable by the
creditor. Receivables float is measured in days.
2) What is payables float?
Generally speaking, payables float is the time period that elapses between the time a payment is
made to a creditor and the cash balance is reduced by the amount of the payment, and the time
that the payment is actually received by the creditor.
3) Name three ways to shorten the receivables cycle.
The time interval between when an invoice is paid and when new bills or invoices are issued
should be reduced to the greatest extent possible, according to the law.
After the material has been dispatched or the service has been rendered, bills or invoices should
be generated immediately.
The length of time that customers have access to credit should be kept as short as possible.
4) Give one example of receivables fraud.
One of the most common types of internal fraud schemes is the lapping of account receivable,
which is the recording of a customer's payment on his or her account after the payment has
been received. The fundamentals of the lapping scheme are as follows: an employee has
misappropriated company funds through a customer's account, either by diverting a cash
payment or issuing a refund payable to the employee, and the company has discovered this.
Customer B makes a payment to customer A's account, customer C makes a payment to
customer B's account, and so on. This is done in order to conceal the misappropriation.
5) Name at least two different types of inventory valuation methods. Discuss the advantages and
disadvantages of each method.
