#1
Which of the following is a primary objective of cash management?
Minimizing idle cash
ExplanationTo optimize cash flow by reducing surplus funds
#2
Which internal control principle ensures that only authorized individuals can access cash?
Restricted access
ExplanationLimiting access to authorized personnel only
#3
Which of the following is a cash inflow for a company?
Sale of goods for cash
ExplanationRevenue generated from direct cash sales of goods or services
#4
What is the purpose of a petty cash fund?
To cover small, incidental expenses without having to write a check
ExplanationProviding readily available funds for minor expenses without formal disbursement processes
#5
Which cash management technique involves delaying payments to conserve cash?
Stretching payables
ExplanationExtending payment terms to retain cash for a longer period
#6
Which of the following is NOT a component of the cash conversion cycle?
Fixed asset turnover period
ExplanationFixed asset turnover period is unrelated to the cash conversion cycle
#7
Which of the following is an example of a compensating control in cash management?
Requiring dual signatures for large disbursements
ExplanationImplementing additional approval processes to mitigate risks
#8
What is the purpose of a cash budget?
To forecast future cash flows and requirements
ExplanationPlanning and estimating cash inflows and outflows for a specified period
#9
In cash management, what does the term 'float' refer to?
The time it takes for a check to clear
ExplanationThe period between the issuance and clearance of a check
#10
In cash management, what is the purpose of a bank reconciliation?
To identify discrepancies between bank records and company records
ExplanationMatching and reconciling company records with bank statements to ensure accuracy
#11
Which internal control measure aims to prevent and detect fraud in cash handling processes?
Routine internal audits
ExplanationRegular reviews and examinations to identify irregularities and fraud
#12
Which of the following is a characteristic of a strong internal control environment for cash management?
Regular reconciliation of bank accounts
ExplanationFrequent verification and balancing of bank accounts to ensure accuracy and integrity