#1
What is the primary goal of cash management?
Minimizing the cost of holding cash
ExplanationReducing expenses associated with idle cash balances.
#2
Which cash management technique involves negotiating favorable terms with suppliers for payment delays?
Stretching accounts payable
ExplanationExtending payment terms with suppliers to conserve cash.
#3
What is the primary purpose of a cash flow forecast in cash management?
To predict future cash inflows and outflows
ExplanationAnticipating upcoming cash movements for planning and decision-making.
#4
Which cash management technique involves speeding up the collection of customer payments?
Lockbox system
ExplanationExpediting the processing of incoming payments.
#5
Which of the following is a cash management technique to accelerate cash inflows?
Offering cash discounts to customers for early payments
ExplanationEncouraging prompt payments from customers.
#6
What is the purpose of a bank reconciliation statement in cash control?
To reconcile the cash account with the bank statement
ExplanationEnsuring consistency between the company's records and the bank's records.
#7
Which of the following is a key component of cash concentration in cash management?
Consolidating funds from multiple accounts into one
ExplanationCentralizing cash resources to improve control and efficiency.
#8
What is the primary drawback of holding a large cash balance in a company's account?
Reduced liquidity
ExplanationLimiting access to funds for investment or operational needs.
#9
Which of the following is an example of a preventive internal control measure for cash management?
Segregation of duties
ExplanationPreventing fraud by dividing responsibilities among different employees.
#10
What is the float in cash management?
The difference between book cash and bank cash
ExplanationDiscrepancy between recorded cash balances and actual cash availability.
#11
What is the purpose of a lockbox system in cash management?
To speed up the collection of customer payments
ExplanationAccelerating the processing of incoming payments.
#12
In the Baumol Model of cash management, what does the 'T' represent?
Time between cash disbursements
ExplanationInterval between cash outflows or expenditures.