Question 1

Which one of the following best defines cash concentration?

Accepted Answer

A)  Combining all of a firm's receipts into one bank deposit
B)  Combining a week's worth of cash receipts into one bank deposit
C)  Combining cash from multiple banks into a firm's main bank accounts
D)  Using multiple lockboxes for collecting cash payments
E)  Combining a firm's bills so that disbursement checks are mailed only monthlyF) D) and E)
G) All of the above

Question 2

Which one of the following terms refers to the basic factors that are reviewed when evaluating the creditworthiness of a potential customer?

Accepted Answer

A)  Terms of sale
B)  Cash concentration
C)  Five Cs of credit
D)  Collection policy
E)  Credit scoreF) C) and D)
G) A) and E)

Question 3

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

A)  Increase the disbursement float by one day
B)  Decrease the collection float by one day
C)  Decrease the net float by two days
D)  Increase the net float by two days
E)  There will be no effect on the firm's floatF) C) and E)
G) C) and D) E

Question 4

Kelly just completed compiling a listing of her firm's accounts receivable with each invoice segregated according to the length of time the invoice has been outstanding.What is the name given to this listing?

Accepted Answer

A)  Aging schedule
B)  Collection report
C)  Credit evaluation report
D)  Invoice schedule
E)  Terms of creditF) A) and C)
G) B) and E)

Question 5

When are funds generally transferred into zero-balance accounts?

Accepted Answer

A)  Monthly
B)  Weekly
C)  Daily
D)  As needed
E)  NeverF) A) and D)
G) C) and E)

Question 6

Which one of the following characteristics generally applies to commercial paper?

Accepted Answer

A)  Issued only by financial institutions
B)  Issued only by corporations
C)  Maturities limited to 90 days or less
D)  Unsecured
E)  Secured by accounts receivableF) A) and E)
G) A) and B)

Question 7

Identify some of the specific costs firms incur if their current asset levels are either too high or too low.

Accepted Answer

Student answers will vary,but should include points such as opportunity costs,carrying and stocking costs,lost sales,bad debts,obsolete inventory,borrowing costs,collection costs,and so forth.

Question 8

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

Accepted Answer

A)  All invoices are to be paid the same day they are received.
B)  All outgoing checks are to be delivered by the fastest means possible.
C)  The depository bank needs to process all deposits in accordance with the Check Clearing Act for the 21st Century.
D)  Any check received is to be held until the customer's account has been updated to record the payment.
E)  Accounts payable processing should be given priority over accounts receivable processing.F) B) and C)
G) C) and E)

Question 9

Cash concentration accounts:

Accepted Answer

A)  are no longer needed since the Check Clearing Act for the 21st Century has been passed.
B)  eliminate the need for lockboxes.
C)  decrease a firm's disbursement float by reducing mail and processing delays.
D)  allow firms to more efficiently handle cash.
E)  tend to decrease a firm's investment income.F) C) and E)
G) A) and E)

Question 10

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

Accepted Answer

A)  Disbursement float is the period of time between a firm making a bank deposit and the funds from that deposit being available to the firm.
B)  Disbursement float decreases when a check is delayed in the mail due to an extended holiday weekend.
C)  Disbursement float causes the available balance to exceed the ledger balance.
D)  Disbursement float is being totally eliminated by the Check Clearing Act for the 21st Century.
E)  Disbursement float exists when the available balance is less than the book balance.F) A) and D)
G) C) and D)

Question 11

Which one of the following is a shortage cost associated with a firm's inventory?

Accepted Answer

A)  Restocking cost
B)  Opportunity cost of capital
C)  Inventory obsolescence
D)  Insurance cost
E)  Inventory theftF) A) and E)
G) A) and D)

Question 12

Which one of the following statements is correct?

Accepted Answer

A)  Firms cannot use lockboxes if they use cash concentration accounts.
B)  Firms prefer to increase processing delay on disbursements.
C)  Firms prefer to eliminate all types of float.
D)  Firms open regional offices so their employees can pick up lockbox payments throughout the day.
E)  The Check Clearing Act for the 21st Century is designed to reduce the collection time to one day.F) C) and E)
G) B) and E) B

Question 13

As of this morning,your firm had a ledger balance of $775 with no outstanding deposits or checks.Today,your firm deposited six checks in the amount of $79 each and wrote a check in the amount of $330.What is the amount of the collection float as of the end of the day?

Accepted Answer

A)  $115
B)  $240
C)  $330
D)  $474
E)  $775F) C) and D)
G) A) and C)

Question 14

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

Accepted Answer

A)  Lockbox account
B)  Cash concentration account
C)  Ledger account
D)  Zero-balance account
E)  Cash clearing accountF) All of the above
G) A) and B)

Question 15

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

Accepted Answer

A)  Inventory flow log
B)  Materials requirements planning
C)  Just-in-time inventory system
D)  Kanban
E)  KeiretsuF) B) and D)
G) A) and D)

Question 16

On May 12,you purchased $3,700 of merchandise from a supplier.The terms of the sale were 2/5,net 15.The discounted amount due is _____ which is payable no later than ____.

Accepted Answer

A)  $2,960; May 17
B)  $3,515; May 27
C)  $3,515; May 17
D)  $3,626; May 17
E)  $3,626; May 27F) A) and B)
G) A) and E)

Question 17

Which one of the following best states the primary goal of inventory management?

Accepted Answer

A)  Minimize the number of orders per year
B)  Minimize the average inventory level
C)  Minimize total inventory costs
D)  Minimize the level of inventory for the most expensive items
E)  Minimize opportunity costsF) None of the above
G) B) and C)

Question 18

Which one of the following is the need to hold cash simply as a financial reserve?

Accepted Answer

A)  Precautionary motive
B)  Opportunistic motive
C)  Speculative motive
D)  Activity motive
E)  Transaction motiveF) C) and D)
G) B) and E)

Question 19

The transaction motive for holding cash refers to the need to have cash for which one of the following purposes?

Accepted Answer

A)  Safety margin
B)  Investment opportunities
C)  Daily operations
D)  Financial reserve
E)  Bargain opportunitiesF) A) and B)
G) C) and E)

Question 20

Which of the following are money market securities?
I.Jumbo CDs
II.Short-term municipal debt
III.U.S.Treasury bills
IV.Commercial paper

Accepted Answer

A)  I and IV only
B)  II and III only
C)  I, II, and IV only
D)  II, III, and IV only
E)  I, II, III, and IVF) A) and C)
G) A) and B)

Exam 17: Working Capital Management

Which one of the following best defines cash concentration?

Correct Answer
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Which one of the following terms refers to the basic factors that are reviewed when evaluating the creditworthiness of a potential customer?

Correct Answer
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Correct Answer
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E

Kelly just completed compiling a listing of her firm's accounts receivable with each invoice segregated according to the length of time the invoice has been outstanding.What is the name given to this listing?

Correct Answer
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When are funds generally transferred into zero-balance accounts?

Correct Answer
verified

Which one of the following characteristics generally applies to commercial paper?

Correct Answer
verified

Identify some of the specific costs firms incur if their current asset levels are either too high or too low.

Correct Answer
verified
Student answers will vary,but should include points such as opportunity costs,carrying and stocking costs,lost sales,bad debts,obsolete inventory,borrowing costs,collection costs,and so forth.

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

Correct Answer
verified

Cash concentration accounts:

Correct Answer
verified

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

Correct Answer
verified

Which one of the following is a shortage cost associated with a firm's inventory?

Correct Answer
verified

Which one of the following statements is correct?

Correct Answer
verified
B

As of this morning,your firm had a ledger balance of $775 with no outstanding deposits or checks.Today,your firm deposited six checks in the amount of $79 each and wrote a check in the amount of $330.What is the amount of the collection float as of the end of the day?

Correct Answer
verified

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

Correct Answer
verified

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

Correct Answer
verified

On May 12,you purchased $3,700 of merchandise from a supplier.The terms of the sale were 2/5,net 15.The discounted amount due is _ which is payable no later than .

Correct Answer
verified

Which one of the following best states the primary goal of inventory management?

Correct Answer
verified

Which one of the following is the need to hold cash simply as a financial reserve?

Correct Answer
verified

The transaction motive for holding cash refers to the need to have cash for which one of the following purposes?

Correct Answer
verified

Which of the following are money market securities? I.Jumbo CDs II.Short-term municipal debt III.U.S.Treasury bills IV.Commercial paper

Correct Answer
verified

Exam 17: Working Capital Management

Which one of the following best defines cash concentration?

Correct AnswerverifiedShow Answer

Which one of the following terms refers to the basic factors that are reviewed when evaluating the creditworthiness of a potential customer?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedE

Kelly just completed compiling a listing of her firm's accounts receivable with each invoice segregated according to the length of time the invoice has been outstanding.What is the name given to this listing?

Correct AnswerverifiedShow Answer

When are funds generally transferred into zero-balance accounts?

Correct AnswerverifiedShow Answer

Which one of the following characteristics generally applies to commercial paper?

Correct AnswerverifiedShow Answer

Identify some of the specific costs firms incur if their current asset levels are either too high or too low.

Correct AnswerverifiedStudent answers will vary,but should include points such as opportunity costs,carrying and stocking costs,lost sales,bad debts,obsolete inventory,borrowing costs,collection costs,and so forth.

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

Correct AnswerverifiedShow Answer

Cash concentration accounts:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which one of the following is a shortage cost associated with a firm's inventory?

Correct AnswerverifiedShow Answer

Which one of the following statements is correct?

Correct AnswerverifiedB

As of this morning,your firm had a ledger balance of $775 with no outstanding deposits or checks.Today,your firm deposited six checks in the amount of $79 each and wrote a check in the amount of $330.What is the amount of the collection float as of the end of the day?

Correct AnswerverifiedShow Answer

Which one of the following is a disbursement account into which funds are transferred from a master account only as the funds are needed to cover checks presented for payment?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

On May 12,you purchased $3,700 of merchandise from a supplier.The terms of the sale were 2/5,net 15.The discounted amount due is _____ which is payable no later than ____.

Correct AnswerverifiedShow Answer

Which one of the following best states the primary goal of inventory management?

Correct AnswerverifiedShow Answer

Which one of the following is the need to hold cash simply as a financial reserve?

Correct AnswerverifiedShow Answer

The transaction motive for holding cash refers to the need to have cash for which one of the following purposes?

Correct AnswerverifiedShow Answer

Which of the following are money market securities? I.Jumbo CDs II.Short-term municipal debt III.U.S.Treasury bills IV.Commercial paper

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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E

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Student answers will vary,but should include points such as opportunity costs,carrying and stocking costs,lost sales,bad debts,obsolete inventory,borrowing costs,collection costs,and so forth.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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B

Correct Answer
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Correct Answer
verified

Correct Answer
verified

On May 12,you purchased $3,700 of merchandise from a supplier.The terms of the sale were 2/5,net 15.The discounted amount due is _ which is payable no later than .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified