Effective cash management and control for a company's operating cycle includes all of the following except
A)the use of a petty cash fund.
B)the preparation of monthly bank reconciliations.
C)the practice of using surplus cash for the purchase of bonds or other long-term investments.
D)the practice of keeping inventory levels low.

Question

Quizplus · Accepted Answer

The use of surplus cash for long-term investments is not part of effective cash management for a company's operating cycle, as it ties up cash that may be needed for daily operations. Effective cash management involves practices such as using a petty cash fund, preparing bank reconciliations, and keeping inventory levels low to maintain liquidity and optimize cash flow for the company's operating cycle.

Effective Cash Management and Control for a Company's Operating Cycle