≡ MENU
MCQs
Papers
Definitions
Flashcards
MCQs
Papers
Definitions
Flashcards
Categories
Marketing Management
Absorption Costing
ACAMS Practice Questions
Accounting Basics
Accounting Cycle and Classifying Accounts
Accounting Final
Accounting For Managers
Accounting for Merchandising Activities
Accounting for Pensions
Accounting Information Systems
Accounting Principles
Accounts Receivables
Acquisition
Activity Based Costing
Adjusting Accounts for Financial Statements
Advanced Business Economics
Advertising and Public Relations
Advertising and Sales Promotion
Agency
An Overview of International Business
Analysis and Forecasting Techniques
Analyzing and Recording Transactions
Applied Business Research
Arithmetic
Asset Demand and Supply under Uncertainty
Audit
Auditing and Attestation
Bankruptcy
Behavioral and Allied Sciences
Bonds and Long Term Notes Payable
Brand Management
Budgeting
Business
Business Analytics
Business Analytics & Technology Management Chapter 2
Business Analytics & Technology Management Chapter 3
Business Analytics & Technology Management Chapter 4
Business Analytics & Technology Management Chapter 5
Business Analytics & Technology Management Chapter 6
Business and Company Law
Business Communication
Business Cycles
Business Economics
Business Environment
Business Essentials
Business Ethics and Governance
Business Ethics Exam
Business Law
Business Law Study guide
Business Mathematics
Business Organisations and Environment
Business organization and systems
Business Process Performance
Business Statistics
Business Strategy
Business Structure
Business Studies
California Real Estate
Capital Assets
Capital Budgeting
Capital Budgeting and Managerial Decisions
Capital Structure
Cash Management
Changes in Accounting Principles
Changing Marketing Environment
Conflict Theory
Consolidated Financial Statements
Consumer Behavior
Contingency
Contracts
Controlling
Corporate and Business Law
Corporate Finance
Corporate Governance
Corporate Law
Corporate Taxation
Corporation
Cost Accounting Final exam
Cost Accumulation Systems
Cost Allocation Techniques
Cost and Managerial Accounting
Cost Behavior
Cost Management
Cost Measurement
Cost of Capital
Cost Terms and Classifications
Cost Volume Profit Analysis
Currency Exchange Rates
Current Assets
Current Liabilities
Customer Relationships and Value
CVP Analysis and Marginal Analysis
Debt and Bankruptcy
Decision Makers
Decision Makers Household Sector
Decision Making
Deferred Tax
Demand for Money
Depreciation
Derivative Instruments and Hedging Activities
Digital Marketing
Dividend Policy
Dividends and Payout Policy
Dividends, Shares, and Income
Donor Tax
E Business
Econometrics
Economics
Elasticities of Demand and supply
Employee Training and Development
Entrepreneurship
Environments of Business
Error Correction
Essence of Management
Ethical and Professional Standards
Ethics and Social Responsibility
Ethics for Management Accountants
External Financial Statements and Revenue Recognition
Federal Securities Acts
Finance
Financial Accounting
Financial and the Nonfinancial Sectors
Financial Decision Making
Financial Instruments
Financial Instruments
Financial Intermediaries and Financial Markets
Financial Management
Financial Markets
Financial Markets and Securities Offerings
Financial Reporting
Financial Statements
Financial Statements and Accounting Transactions
Fixed Assets
Flexible Budgets and Standard Costs
Florida Real Estate MCQs
Fraud Internal Control and Cash
Fundamental Accounting Principles
Global Finance
Global Marketing
Global Marketing and World Trade
Governmental Accounting State and Local
Gross Estate
Health and Life Comprehensive Exam
Health and Life Practice Questions
Health Insurance
Hedging Instruments
HR Management
HRM
Human Resource Management
Human Resource Management HRM
Human Resource Planning
Importance of Business Economics
Income Tax
Individual Taxation
Information Technology
Insurance
Insurance and Risk Management
Insurance License Texas Life and Health
Intangible Asset
Integrated Marketing Communications and Direct Marketing
Interactive Marketing and Electronic Commerce
Internal Auditing and Systems Controls
Internal Control and Cash
International Business
International Economics
International Finance
International Marketing
International Trade
International Trade and Globalisation
Interpersonal and Organizational Communication
Introduction to Business
Introduction to Human Resource Management
Introduction to Human Resources Assessment
Inventory Management
Investment
Investment Risk and Portfolio Management
Job Order Costing
Leading
Lease
Legal Management
Life and Health Insurance
Life Insurance
Life Insurance Basics
Life Insurance Policies
Life Insurance Policy
Long Term Investment
Long Term Securities
Macro Policy
Macroeconomics
Management
Management and Cost Accounting
Management Science
Managerial Accounting
Managerial Accounting Concepts and Principles
Managerial Economics
Managing Organizational Change
Managing Production and Operations
Managing Products and Brands
Managing Services
Market Segmentation Targeting and Positioning
Marketing
Marketing and Corporate Strategies
Marketing Channels and Wholesaling
Master Budgets and Planning
Merger
Mergers and Acquisitions
Microsoft Excel
Money and Banking
mortgage
National Health Insurance
Not For Profit Accounting
Operations Management
Organization and Operation of Corporations
Organization Culture
Organization Effectiveness
Organizational Behavior
Organizational Behavior Essentials
Organizational Markets and Buyer Behaviour
Organizational Structure and Design
Partnership Taxation
Partnerships
Payroll
Payroll Liabilities
Performance Management
Personal Selling and Sales Management
Planning
Present Value
Pricing
Principles and Practices of Management
Probability Analysis
Process Costing
Production and Operations Management
Professional Practice
Professional Responsibilities
Profit Planning
Profitability Analysis and Analytical Issues
Profitability Analysis and Decentralization
Project Management
Property
Property Plant and Equipment
Property Plant and Equipment Exam
Ratio Analysis
Real Estate
Receivables
Reporting and Analyzing Cash Flows
Reporting and Analyzing Long Lived Assets
Reporting and Analyzing Receivables
Responsibility Accounting and Performance Measures
Retailing
Revenue Recognition
Risk and Procedures for Control
Sales
SAP
Secured Transactions
Service Department Costing
Short Term Financing
Short Term Investment
Standard Costs and Variance Analysis
State Health Insurance
Statement of Cash Flow
Statement of Comprehensive Income
Statement of Financial Position
Statistics
Stock Market and Stock Prices
Stockholders Equity
Strategic Marketing Process
Strategic Planning
Strategy
Structure of Interest Rates
Succession and Transfer Taxes
Supply Chain and Logistics Management
System Analysis and Design
Systems Controls
Tax Law
Taxation
Texas Real Estate
The Management Challenge
Total Quality Management
Transfer Pricing
Understanding Exchange Rates
Understanding Interest Rates
Understanding Interest Rates Determinants
Value Added Tax
Variable Costing
Working Capital
Home
—›
Cash Management
Cash Management MCQs
?
Of the following, the working capital financing policy that would subject a firm to the greatest level of risk is the one where the firm finances
Fluctuating current assets with short-term debt.
Permanent current assets with long-term debt.
Fluctuating current assets with long-term debt.
Permanent current assets with short-term debt.
?
Average daily cash outflows are $3 million for Evans, Inc. A new cash management system can add 2 days to the disbursement schedule. Assuming Evans ea...
$6,000,000
$3,000,000
$1,500,000
$600,000
?
According to John Maynard Keynes, the three major motives for holding cash are for
Transactional, psychological, and social purposes.
Speculative, fiduciary, and transactional purposes.
Speculative, social, and precautionary purposes.
Transactional, precautionary, and speculative purposes.
?
A consultant recommends that a company hold funds for the following two reasons: 1. Reason #1: Cash needs can fluctuate substantially throughout the ...
Speculative balances Speculative balances
Speculative balances Precautionary balances
Precautionary balances Speculative balances
Precautionary balances Precautionary balances
?
All of the following are valid reasons for a business to hold cash and marketable securities except to
Satisfy compensating balance requirements.
Maintain adequate cash needed for transactions.
Meet future needs.
Earn maximum returns on investment assets.
?
Some managers express the opinion that their “cash management problems are nothing more than inventory problems.” They then proceed to use cash ma...
Credit and collection policies.
Marketable securities level.
Proper relationship between current assets and current liabilities.
Proper blend of marketable securities and cash.
?
The economic order quantity (EOQ) formula can be adapted in order for a firm to determine the optimal split between cash and marketable securities. Th...
The cost of a transaction is independent of the dollar amount of the transaction.
Interest rates are constant over the short run.
There is an opportunity cost associated with holding cash, beginning with the first dollar.
Cash flow requirements are random.
?
The most direct way to prepare a cash budget for a manufacturing firm is to include
Projected sales, credit terms, and net income.
Projected net income, depreciation, and goodwill impairment.
Projected purchases, percentages of purchases paid, and net income.
Projected sales and purchases, percentages of collections, and terms of payments.
?
What is the benefit for a firm with daily cash receipts of $15,000 to be able to speed up collections by 2 days, assuming an 8% annual return on short...
$2,400 daily benefit.
$2,400 annual benefit.
$15,000 annual benefit.
$30,000 annual benefit.
?
DLF is a retail mail order firm that currently uses a central collection system that requires all checks to be sent to its Boston headquarters. An ave...
$1,200,000
$750,000
$600,000
$450,000
?
A lockbox system
Reduces the need for compensating balances.
Provides security for late night deposits.
Reduces the risk of having checks lost in the mail.
Accelerates the inflow of funds.
?
A firm has daily cash receipts of $100,000 and collection time of 2 days. A bank has offered to reduce the collection time on the firm’s deposits by...
$3,000
$12,000
$0
$6,000
?
A firm has daily cash receipts of $200,000. A commercial bank has offered to reduce the collection time by 3 days. The bank requires a monthly fee of ...
$(24,000)
$24,000
$66,240
$68,000
?
A firm has daily cash receipts of $300,000. A bank has offered to provide a lockbox service that will reduce the collection time by 3 days. The bank ...
$(24,000)
$12,000
$30,000
$54,000
?
A firm has daily cash receipts of $300,000. A commercial bank has offered to reduce the collection time by 2 days. The bank requires a monthly fee of ...
$(30,000)
$30,000
$66,000
$63,000
?
A firm has daily cash receipts of $300,000 and is interested in acquiring a lockbox service in order to reduce collection time. Bank 1’s lockbox ser...
Bank 1.
Bank 2.
Bank 3.
Bank 4.
?
Newman Products has received proposals from several banks to establish a lockbox system to speed up receipts. Newman receives an average of 700 checks...
A $0.50 fee per check.
A flat fee of $125,000 per year.
A fee of 0.03% of the amount collected.
A compensating balance of $1,750,000.
?
Cleveland Masks and Costumes, Inc., (CMC) has a majority of its customers located in the states of California and Nevada. Keystone National Bank, a ma...
$59,125
$60,875
$50,000
$120,000
?
CMR is a retail mail order firm currently using a central collection system that requires all checks to be sent to its Boston headquarters. An average...
$250,000
$400,000
$650,000
$800,000
?
Foster, Inc., is considering implementing a lockbox collection system at a cost of $80,000 per year. Annual sales are $90 million, and the lockbox sys...
Yes, producing savings of $140,000 per year.
Yes, producing savings of $60,000 per year.
No, producing a loss of $20,000 per year.
No, producing a loss of $60,000 per year
?
A company has daily cash receipts of $150,000. The treasurer of the company has investigated a lockbox service whereby the bank that offers this servi...
$6,000
$(6,000)
$12,000
$(12,000)
?
A typical firm doing business nationally cannot expect to accelerate its cash inflow by
Establishing multiple collection centers throughout the country.
Employing a lockbox arrangement.
Initiating controls to accelerate the deposit and collection of large checks.
Maintaining compensating balances rather than paying cash for bank services.
?
Methods of accelerating cash collections include all of the following except
Decentralized collections.
Electronic funds transfers.
Compensating balances.
Lockbox systems.
?
An automated clearinghouse (ACH) electronic transfer is a(n)
Electronic payment to a company’s account at a concentration bank.
Check that must be immediately cleared by the Federal Reserve Bank.
Computer-generated deposit ticket verifying deposit of funds.
Check-like instrument drawn against the payor and not against the bank.
?
Kemple is a newly established janitorial firm, and the owner is deciding what type of checking account to open. Kemple is planning to keep a $500 mini...
Standard account, because the savings is $34 per year.
Premium account, because the savings is $34 per year.
Standard account, because the savings is $16 per year.
Premium account, because the savings is $16 per year.
?
A compensating balance
Compensates a financial institution for services rendered by providing it with deposits of funds.
Is used to compensate for possible losses on a marketable securities portfolio.
Is a level of inventory held to compensate for variations in usage rate and lead time.
Is the amount of prepaid interest on a loan.
?
A working capital technique that increases the payable float and therefore delays the outflow of cash is
Concentration banking.
A draft.
Electronic data interchange (EDI).
A lockbox system.
?
A working capital technique that delays the outflow of cash is
Factoring.
A draft.
A lockbox system.
Electronic funds transfer.
?
Assume that each day a company writes and receives checks totaling $10,000. If it takes 5 days for the checks to clear and be deducted from the compan...
$10,000
$0
$(10,000)
$50,000
?
Average daily collection of checks for a firm is $40,000. The firm also writes on the average $35,000 of checks daily. If the collection period for ch...
$25,000
$40,000
$175,000
$200,000
?
All of the following are reasons for holding cash except for the
Precautionary motive.
Transactions motive.
Motive to make a profit.
Motive to meet future needs.
?
All of the following can be utilized by a firm in managing its cash outflows except
Zero-balance accounts.
Centralization of payables.
Controlled disbursement accounts.
Lockbox system.
?
JKL Industries requires its branch offices to transfer cash balances once per week to the central corporate account. A wire transfer costs $12 and ass...
$21,000
$24,000
$27,000
$42,000
?
Burr Company had the following account balances at December 31, year 2: Cash in banks $2,250,000 Cash on hand 125,000 Cash legally restricted for ...
$1,775,000
$2,250,000
$2,375,000
$3,975,000
?
Ral Corp.’s checkbook balance on December 31, year 2, was $5,000. In addition, Ral held the following items in its safe on that date: Check payab...
$4,800
$5,300
$6,500
$6,800
?
On October 31, year 2, Dingo, Inc. had cash accounts at three different banks. One account balance is segregated solely for a November 15, year 2 pa...
The segregated account should be reported as a noncurrent asset, the regular account should be reported as a current asset, and the overdraft should be reported as a current liability.
The segregated and regular accounts should be reported as current assets, and the overdraft should be reported as a current liability.
The segregated account should be reported as a noncurrent asset, and the regular account should be reported as a current asset net of the overdraft.
The segregated and regular accounts should be reported as current assets net of the overdraft.
?
Troy Toys is a retailer operating in several cities. The individual store managers deposit daily collections at a local bank in a noninterest-bearin...
It would never be economically feasible.
$125,000 or above.
Any amount greater than $173.
Any amount greater than $62,500.
?
Which of the following is true about electronic funds transfer from a cash flow standpoint?
It is always beneficial from a cash flow standpoint.
It is never beneficial from a cash flow standpoint.
It is beneficial from a cash receipts standpoint but not from a cash disbursements standpoint.
It is beneficial from a cash disbursements standpoint but not from a cash receipts standpoint.
?
Management of Radker Corp. is considering a lockbox system. The bank will charge $10,000 annually for the service, which will save the firm approxim...
$5,000 loss.
$10,000 loss.
$10,000 benefit.
$5,000 benefit.
?
Which of the following is true about a firm’s float?
A firm strives to minimize the float for both cash receipts and cash disbursements.
A firm strives to maximize the float for both cash receipts and cash disbursements.
A firm strives to maximize the float for cash receipts and minimize the float for cash disbursements.
A firm strives to maximize the float for cash disbursements and minimize the float for cash receipts.
?
A firm is evaluating whether to establish a concentration banking system. The bank will charge $5,000 per year for maintenance and transfer fees. Th...
Do not establish the concentration banking system because the net cost is $5,000.
Do not establish the concentration banking system because the net cost is $21,000.
Establish the concentration banking system because the net benefit is $115,000.
Establish the concentration banking system because the net benefit is $4,200.
?
A firm is evaluating whether to establish a lockbox system. The bank will charge $30,000 per year for the lockbox and the firm will save approximate...
Do not establish the lockbox system because the net cost is $30,000.
Do not establish the lockbox system because the net cost is $22,000.
Establish the lockbox system because the net benefit is $12,000.
Establish the lockbox system because the net benefit is $20,000.
?
An organization has an opportunity to establish a zero balance account system using four different regional banks. The total amount of the maintenan...
Do not establish the zero balance account system because it results in estimated additional net costs of $6,000.
Do not establish the zero balance account system because it results in estimated additional net costs of $1,200.
Establish the zero balance account system because it results in estimated net savings of $1,200.
Establish the zero balance account system because it results in estimated net savings of $7,200.
?
A working capital technique that increases the payable float and therefore delays the outflow of cash is
Concentration banking.
A draft.
Electronic Data Interchange (EDI).
A lockbox system
?
Newman Products has received proposals from several banks to establish a lockbox system to speed up receipts. Newman receives an average of 700 chec...
A $0.50 fee per check.
A flat fee of $125,000 per year.
A fee of 0.03% of the amount collected.
A compensating balance of $1,750,000.
?
A firm has daily cash receipts of $100,000. A bank has offered to reduce the collection time on the firm’s deposits by two days for a monthly fee ...
$ 3,000
$12,000
$0
$ 6,000
?
A minimum checking account balance that a firm must maintain with a commercial bank is a
Transaction balance.
Compensating balance.
Precautionary balance.
Speculative balance.
?
A firm has daily receipts of $100,000. A bank has offered to reduce the collection time on the firm’s deposits by two days for a monthly fee of $5...
$0
$ 3,000
$ 6,000
$12,000
?
Cleveland Masks and Costumes Inc. (CMC) has a majority of its customers located in the states of California and Nevada. Keystone National Bank, a ma...
$ 51,750
$ 60,875
$111,750
$120,875
