Cash Management MCQs

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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






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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...






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According to John Maynard Keynes, the three major motives for holding cash are for






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A consultant recommends that a company hold funds for the following two reasons: 1. Reason #1: Cash needs can fluctuate substantially throughout the ...






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All of the following are valid reasons for a business to hold cash and marketable securities except to






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Some managers express the opinion that their cash management problems are nothing more than inventory problems. They then proceed to use cash manage...






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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...






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The most direct way to prepare a cash budget for a manufacturing firm is to include






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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...






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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...






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A lockbox system






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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 firms deposits by 2...






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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 ...






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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 ...






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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 ...






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A firm has daily cash receipts of $300,000 and is interested in acquiring a lockbox service in order to reduce collection time. Bank 1s lockbox servi...






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Newman Products has received proposals from several banks to establish a lockbox system to speed up receipts. Newman receives an average of 700 checks...






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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...






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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...






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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...






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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...






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A typical firm doing business nationally cannot expect to accelerate its cash inflow by






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Methods of accelerating cash collections include all of the following except






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An automated clearinghouse (ACH) electronic transfer is a(n)






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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...






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A compensating balance






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A working capital technique that increases the payable float and therefore delays the outflow of cash is






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A working capital technique that delays the outflow of cash is






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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...






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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...






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All of the following are reasons for holding cash except for the






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All of the following can be utilized by a firm in managing its cash outflows except






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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...






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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 ...






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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 payable...






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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...






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Troy Toys is a retailer operating in several cities. The individual store managers deposit daily collections at a local bank in a noninterest-bearin...






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Which of the following is true about electronic funds transfer from a cash flow standpoint?






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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...






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Which of the following is true about a firms float?






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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...






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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...






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An organization has an opportunity to establish a zero balance account system using four different regional banks. The total amount of the maintenan...






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A working capital technique that increases the payable float and therefore delays the outflow of cash is






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Newman Products has received proposals from several banks to establish a lockbox system to speed up receipts. Newman receives an average of 700 chec...






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A firm has daily cash receipts of $100,000. A bank has offered to reduce the collection time on the firms deposits by two days for a monthly fee of...






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A minimum checking account balance that a firm must maintain with a commercial bank is a






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A firm has daily receipts of $100,000. A bank has offered to reduce the collection time on the firms deposits by two days for a monthly fee of $500...






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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...