Which of the following statements are correct concerning the cash balance of a ﬁrm? I.Most ﬁrms plan on maintaining a minimum cash balance at all times.
II)The cumulative cash surplus shown on a cash budget is equal to the ending cash balance plus
The minimum cash balance retained by the ﬁrm.
III)The cumulative cash surplus at the end of March cannot be used as the beginning cash balance
For April when you are compiling a projected monthly cash balance report.
IV)A negative cumulative cash surplus indicates a borrowing need by the ﬁrm.
A)I and III only.
B)II and IV only.
C)I and IV only.
D)II and III only.
E)I and II only.

Question

Quizplus · Accepted Answer

I) Most firms indeed aim to maintain a minimum cash balance for operational liquidity and unforeseen expenses, making this statement correct. IV) A negative cumulative cash surplus indeed indicates that the firm's cash outflows have exceeded its inflows, suggesting a potential need for borrowing to cover the shortfall. Statements II and III contain inaccuracies regarding the handling and interpretation of cash balances and cash budgeting processes.

Which of the Following Statements Are Correct Concerning the Cash