Question 1

Which one of the following is a speculative motive for holding cash?

Accepted Answer

The speculative motive for holding cash involves keeping cash on hand to take advantage of unexpected opportunities, such as buying extra inventory at a discount.

Question 2

Which one of the following is the set of procedures used to determine the inventory levels for demand-dependent inventory?

Accepted Answer

Materials requirements planning (MRP) is the set of procedures used to determine the inventory levels for demand-dependent inventory. MRP works by calculating the materials and inventory requirements needed to produce a particular product or service, based on forecasted demand, production schedules, and inventory levels. Other options listed are different inventory management systems, but they do not specifically deal with determining inventory levels for demand-dependent inventory.

Question 3

Faith wrote a check for $22 on Friday,May 6.The check cleared the bank on Wednesday,May 11.There were no other checks or deposits outstanding during the month.Given this,which one of the following statements is correct?

Accepted Answer

The answer of Faith wrote a check for $22 on...

Question 4

Which one of the following is a system for managing demand-dependent inventories that minimizes the amount of inventory on hand?

Accepted Answer

Just-in-time inventory system is the system for managing demand-dependent inventories that minimizes the amount of inventory on hand. This system relies on producing and receiving goods just in time, without excessive inventory buildup. This system is based on the principle of continuous improvement and a close relationship between suppliers and manufacturers. Option A, B, D, and E are not the correct options for the given question.

Question 5

Which one of the following is most likely the fastest method of collecting cash?

Accepted Answer

Initiating a financial electronic data interchange at the time of sale allows for immediate transfer of funds electronically, which is the fastest method of collecting cash. Option A and B involve physical transportation of payments and may result in longer processing time. Option D offers a discount for early payment but does not necessarily speed up the collection process. Option E refers to reducing the time it takes for checks to clear, but does not affect the collection speed.

Question 6

Which one of the following statements is correct?

Accepted Answer

Firms prefer to increase processing delay on disbursements to slow down the outflow of cash, which helps in managing their cash flow more effectively.

Question 7

Al's Bakery has a checkbook balance of $1,650.A $700 deposit was made today and will be added to the available balance tomorrow.There are two outstanding checks that total to $623.There are no other outstanding items.Which one of the following statements accurately reflects this situation?

Accepted Answer

The answer of Al's Bakery has a checkbook balance of...

Question 8

Stewart's Office Supply has revised its office procedures such that it now takes one day to prepare the daily deposit,rather than two days.Accounts payable are processed in five days,rather than the previous four days,so that shipping and receiving can better verify the charges before the checks are written.How will these revised procedures affect the firm's float?

Accepted Answer

The answer of Stewart's Office Supply has revised its office...

Question 9

Which one of the following best represents the transaction motive for holding cash?

Accepted Answer

Distributing paychecks is a regular and predictable cash outflow that requires a cash balance to cover the payments. This represents the transaction motive for holding cash. Choices A, C, and D relate to investment or precautionary motives, while choice E relates to a precautionary motive for holding cash.

Question 10

Which one of the following is most apt to delay the collection of cash?

Accepted Answer

Posting payments to accounts receivable prior to making deposits can delay the collection of cash because the funds are not immediately available for use. Posting payments to accounts receivable is necessary for accurate record-keeping, but delaying the deposit of funds can have an impact on cash flow. The other options listed may actually speed up the collection process.

Question 11

Which one of the following best defines the economic order quantity (EOQ)?

Accepted Answer

The economic order quantity (EOQ) is the restocking quantity that minimizes the total cost of inventory. It takes into account the costs of ordering and holding inventory, and calculates the optimal order size that balances these costs.

Question 12

Which of the following practices will reduce a firm's collection float?
I.Installing a lockbox system
II.Utilizing zero-balance accounts
III.Depositing checks daily rather than weekly
IV.Reducing the processing delay by one day

Accepted Answer

Installing a lockbox system (I) will reduce the float as the payments are sent directly to the bank and processed faster. Depositing checks daily rather than weekly (III) will also reduce the float as the checks will be processed faster. Reducing the processing delay by one day (IV) will further reduce the float. Utilizing zero-balance accounts (II) will not necessarily reduce the float but can help with cash management. Therefore, the correct answer is I, III, and IV only (D).

Question 13

A firm's float management policy is most apt to include which one of the following statements?

Accepted Answer

Float management is the process of optimizing cash position and minimizing the time that elapses between the time a check is written and the time it clears the bank. The Check Clearing Act for the 21st Century mandates that when a check is deposited, the depository bank must process the deposit no later than the next business day after the deposit. Therefore, a firm's float management policy may include a statement that the depository bank needs to process all deposits in accordance with the Check Clearing Act for the 21st Century.

Question 14

To minimize collection float,a firm should do which of the following?
I.Deposit its collections at least daily
II.Make sure all checks it receives at the sales counter are properly dated and signed
III.Pay its bills in a more timely manner
IV.Eliminate its regional lockboxes and have only one central lockbox located near the firm's home office

Accepted Answer

To minimize collection float, a firm should deposit its collections at least daily to ensure that they are processed quickly. The firm should also make sure that all checks it receives at the sales counter are properly dated and signed to prevent delays. Paying bills in a more timely manner can help to reduce disbursement float, but it does not directly affect collection float. Eliminating regional lockboxes and having only one central lockbox located near the firm's home office could actually increase collection float since it would take longer for payments to reach the centralized location. Therefore, the best choice is A, which includes the options of depositing collections at least daily and ensuring proper check documentation.

Question 15

Ted's Toys just reconciled its bank account and has $12,300 in outstanding deposits and $31,400 in checks outstanding.The firm's checkbook has a positive balance.The firm sells on a cash basis only and deposits its receipts on a daily basis.The deposited funds are available to the firm the following day.The firm writes and mails checks on a daily basis also.These checks generally clear the bank in three days.What do you know about the firm's float given this information?

Accepted Answer

Float is the time between when a payment is made by the firm and when the payment is received by the recipient. In this case, the checks outstanding exceed the outstanding deposits, meaning that the firm has more money leaving the account than entering, resulting in a disbursement float. Therefore, the correct answer is D.

Question 16

Laurie's Ice Rink keeps an extra $1,500 in its checking account simply in case an emergency arises.Which type of motive for holding cash does this represent?

Accepted Answer

The extra $1,500 in Laurie's Ice Rink's checking account represents a precautionary motive for holding cash. In other words, the cash is being held as a buffer or safety net in case an unexpected emergency comes up.

Question 17

Which one of the following statements concerning disbursement float is correct?

Accepted Answer

The answer of Which one of the following statements concerning...

Question 18

Which one of the following is an expected result of the Check Clearing Act for the 21^st Century?

Accepted Answer

The Check Clearing for the 21st Century Act, also known as Check 21, allows banks to handle checks electronically, which speeds up the check clearing process and reduces both collection and disbursement float.

Question 19

Which one of the following will reduce the disbursement float of a firm?

Accepted Answer

Paying a loan payment at the bank rather than mailing a check to the bank will reduce the disbursement float because the payment will be posted immediately rather than taking time to process through the mail.

Question 20

Taylor's Market received five checks today and went to the bank to deposit all of them.Unfortunately,the bank was closed for the day due to a robbery.How does the bank closure affect the firm's float assuming these five checks are the only outstanding bank items?

Accepted Answer

The answer of Taylor's Market received five checks today and...

Quiz 17: Working Capital Management

Which one of the following is a speculative motive for holding cash?

Which one of the following is the set of procedures used to determine the inventory levels for demand-dependent inventory?

Faith wrote a check for $22 on Friday,May 6.The check cleared the bank on Wednesday,May 11.There were no other checks or deposits outstanding during the month.Given this,which one of the following statements is correct?

Which one of the following is a system for managing demand-dependent inventories that minimizes the amount of inventory on hand?

Which one of the following is most likely the fastest method of collecting cash?

Which one of the following statements is correct?

Al's Bakery has a checkbook balance of $1,650.A $700 deposit was made today and will be added to the available balance tomorrow.There are two outstanding checks that total to $623.There are no other outstanding items.Which one of the following statements accurately reflects this situation?

Which one of the following best represents the transaction motive for holding cash?

Which one of the following is most apt to delay the collection of cash?

Which one of the following best defines the economic order quantity (EOQ) ?

Which of the following practices will reduce a firm's collection float? I.Installing a lockbox system II.Utilizing zero-balance accounts III.Depositing checks daily rather than weekly IV.Reducing the processing delay by one day

A firm's float management policy is most apt to include which one of the following statements?

Laurie's Ice Rink keeps an extra $1,500 in its checking account simply in case an emergency arises.Which type of motive for holding cash does this represent?

Which one of the following statements concerning disbursement float is correct?

Which one of the following is an expected result of the Check Clearing Act for the 21^st Century?

Which one of the following will reduce the disbursement float of a firm?

Taylor's Market received five checks today and went to the bank to deposit all of them.Unfortunately,the bank was closed for the day due to a robbery.How does the bank closure affect the firm's float assuming these five checks are the only outstanding bank items?

Quiz 17: Working Capital Management

Which one of the following is a speculative motive for holding cash?

Which one of the following is the set of procedures used to determine the inventory levels for demand-dependent inventory?

Faith wrote a check for $22 on Friday,May 6.The check cleared the bank on Wednesday,May 11.There were no other checks or deposits outstanding during the month.Given this,which one of the following statements is correct?

Which one of the following is a system for managing demand-dependent inventories that minimizes the amount of inventory on hand?

Which one of the following is most likely the fastest method of collecting cash?

Which one of the following statements is correct?

Al's Bakery has a checkbook balance of $1,650.A $700 deposit was made today and will be added to the available balance tomorrow.There are two outstanding checks that total to $623.There are no other outstanding items.Which one of the following statements accurately reflects this situation?

Which one of the following best represents the transaction motive for holding cash?

Which one of the following is most apt to delay the collection of cash?

Which one of the following best defines the economic order quantity (EOQ) ?

Which of the following practices will reduce a firm's collection float? I.Installing a lockbox system II.Utilizing zero-balance accounts III.Depositing checks daily rather than weekly IV.Reducing the processing delay by one day

A firm's float management policy is most apt to include which one of the following statements?

Laurie's Ice Rink keeps an extra $1,500 in its checking account simply in case an emergency arises.Which type of motive for holding cash does this represent?

Which one of the following statements concerning disbursement float is correct?

Which one of the following is an expected result of the Check Clearing Act for the 21st Century?

Which one of the following will reduce the disbursement float of a firm?

Taylor's Market received five checks today and went to the bank to deposit all of them.Unfortunately,the bank was closed for the day due to a robbery.How does the bank closure affect the firm's float assuming these five checks are the only outstanding bank items?

Which one of the following is an expected result of the Check Clearing Act for the 21^st Century?