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CIMAPRA19-F01-1 Exam - 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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Regenia
7 months ago
Totally agree with C, that makes the most sense!
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Lavera
7 months ago
Wait, how does overseas sales affect receivable days?
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Georgiann
7 months ago
D seems like a valid concern too, but not sure it’s the main reason.
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Amber
7 months ago
I think C is the right answer here.
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Yen
8 months ago
A is definitely a reason for increased receivable days.
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Shawana
8 months ago
I feel like D could definitely be a factor, but I’m not confident if it’s the right answer here.
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Graciela
8 months ago
I practiced a similar question where increased sales affected receivable days, so B could be a valid reason for the increase too.
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Cherry
8 months ago
I’m not entirely sure, but I think if they transferred collections to a factoring agency, it might not increase days. That makes me lean towards C.
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Gail
8 months ago
I remember discussing how extended credit terms can lead to higher receivable days, so A seems plausible.
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Dick
8 months ago
Definitely going with option C - equivalence partitioning enhanced with boundary value analysis. This will help me systematically test the critical input ranges and ensure the traffic control system is processing the data as expected.
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Aleisha
8 months ago
I'm a bit unsure about this one, but I'll carefully review the options and try to come up with the best solution.
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Lashawna
1 year 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 year 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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Rosamond
11 months ago
D) An inexperienced credit controller was employed in the last few months of year ended 31 December and requires substantial training.
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Fannie
11 months ago
C) The entity has transferred all receivables collections to a factoring agency during 20X2.
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Paris
11 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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Beatriz
1 year ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Leanora
1 year 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
12 months 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
12 months 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 months ago
I agree, offering extended credit terms can definitely lead to an increase in receivables days.
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Aimee
1 year 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
11 months ago
C) The entity has transferred all receivables collections to a factoring agency during 20X2.
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Lisha
11 months ago
C) The entity has transferred all receivables collections to a factoring agency during 20X2.
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Merlyn
11 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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Matthew
12 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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Luis
1 year ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Luisa
1 year ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Francesco
1 year 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 year 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
1 year ago
A) The entity has increased turnover for year ended 31 December 20X2 by offering extended credit terms.
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Deane
1 year ago
But C seems like a valid reason for the increase in receivable days.
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Marguerita
1 year ago
I disagree, I believe the answer is D.
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Deane
1 year ago
I think the answer is C.
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