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CIMA Exam CIMAPRA19-F01-1 Topic 3 Question 68 Discussion

Actual exam question for CIMA's CIMAPRA19-F01-1 exam
Question #: 68
Topic #: 3
[All CIMAPRA19-F01-1 Questions]

AB has been asked to analyze the receivables days of an entity with a view to improving the working capital cycle.

The following results have been produced for receivable days:

Which of the following is NOT an explanation of why the days have increased?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Sarah at Apr 03, 2023, 06:54 AM

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Lashawna
1 months ago
I'm just hoping the entity didn't try to improve working capital by asking the customers to pay in Bitcoin. That would really extend those receivables days!
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Diane
1 months ago
Substantial sales to overseas entities could contribute to the increase in receivables days, as international collections can be more challenging. But this is still an explanation, not the answer the question is looking for.
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Paris
2 days ago
B) The entity has made substantial sales to overseas entities in the last few months of the year ended 31 December 20X2.
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Beatriz
20 days ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Leanora
1 months ago
Offering extended credit terms to increase turnover is a common tactic, so A seems to be a plausible explanation for the rise in receivables days. This option seems to be the correct answer.
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Carlee
6 days ago
I think option D could also be a valid explanation. An inexperienced credit controller might not be efficient in collecting receivables, leading to an increase in receivables days.
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Niesha
7 days ago
But what about option C, transferring receivables collections to a factoring agency? Could that also be a reason for the increase?
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Craig
12 days ago
I agree, offering extended credit terms can definitely lead to an increase in receivables days.
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Aimee
2 months ago
Hiring an inexperienced credit controller would definitely explain the rise in receivables days, as they may not be as efficient at collections. But the question asks for what is NOT an explanation, so D is not the right answer.
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Jessenia
1 days ago
C) The entity has transferred all receivables collections to a factoring agency during 20X2.
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Lisha
2 days ago
C) The entity has transferred all receivables collections to a factoring agency during 20X2.
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Merlyn
3 days ago
B) The entity has made substantial sales to overseas entities in the last few months of the year ended 31 December 20X2.
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Matthew
14 days ago
B) The entity has made substantial sales to overseas entities in the last few months of the year ended 31 December 20X2.
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Luis
27 days ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Luisa
1 months ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Francesco
2 months ago
The increase in receivables days is clearly not due to transferring collections to a factoring agency, as that would reduce the receivables balance and the days outstanding. This is a straightforward elimination of C as the correct answer.
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Vanesa
1 months ago
B) The entity has made substantial sales to overseas entities in the last few months of the year ended 31 December 20X2.
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Nikita
2 months ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Deane
2 months ago
But C seems like a valid reason for the increase in receivable days.
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Marguerita
2 months ago
I disagree, I believe the answer is D.
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Deane
2 months ago
I think the answer is C.
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