Question 1

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

Accepted Answer

A)  Buying extra inventory because a key supplier offered a special one-time discount
B)  Paying a $100 bonus to all employees at year-end
C)  Paying the annual insurance premium on the firm's assets
D)  Needing to purchase a new delivery truck because the old one was totally destroyed in an accident
E)  Contributing $1,000 to help fund medical care for an uninsured neighborF) A) and B)
G) D) and E)

Question 2

Which one of the following statements concerning money market securities is correct?

Accepted Answer

A)  Commercial paper is highly marketable.
B)  All T-bills are issued with 90-day maturities.
C)  A certificate of deposit is a short-term loan to the government.
D)  Any CD with a face amount of $10,000 or more is classified as a jumbo CD.
E)  Money market preferred is less volatile than ordinary preferred.F) A) and C)
G) All of the above

Question 3

What are some of the pros and cons of a JIT inventory management system?

Accepted Answer

Pros: reduced investment in inventory,lo...

Question 4

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

A)  The disbursement float is $1,650.
B)  The firm's current available balance is equal to $1,650 plus $700 minus $623.
C)  The firm's collection float exceeds its disbursement float.
D)  The firm's available balance is greater than its book balance.
E)  The firm has a net disbursement float.F) All of the above
G) A) and B)

Question 5

A firm grants credit with terms of 2/5,net 20.The firm's customers have ___ days to pay in order to receive a _____ percent discount.

Accepted Answer

A)  2; 5
B)  5; 2
C)  15; 2
D)  20; 2
E)  30; 5F) A) and E)
G) A) and B)

Question 6

River City Gifts has an average collection period of 20 days and annual sales of $650,000.What is the average investment in accounts receivable as shown on the balance sheet?

Accepted Answer

A)  $18,850
B)  $20,375
C)  $25,506
D)  $28,900
E)  $35,616F) D) and E)
G) A) and C)

Question 7

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

Accepted Answer

A)  Requiring customers to submit all payments to a lockbox
B)  Requiring customers to submit all payments to the home office
C)  Initiating a financial electronic data interchange at the time of sale
D)  Offer customers credit terms of 1/5, net 15
E)  Eliminating all disbursement floatF) A) and E)
G) A) and D)

Question 8

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

A)  Collection float increased
B)  Collection float decreased
C)  Disbursement float increased
D)  Disbursement float decreased
E)  Net float remained unchangedF) C) and D)
G) D) and E)

Question 9

Which of the following characteristics apply to U.S.Treasury bills?
I.Income taxed at both the federal and state level
II.Minimal,if any,default risk
III.Marketable,but not liquid
IV.Short maturities

Accepted Answer

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

Question 10

Which one of the following terms refers to the length of time a firm grants its customers to pay for their purchases?

Accepted Answer

A)  Lockbox period
B)  Discount period
C)  Credit period
D)  Cash cycle
E)  Receivables turnover periodF) B) and E)
G) A) and E)

Question 11

Which one of the following is true concerning a controlled disbursement account?

Accepted Answer

A)  The number of checks that can be disbursed on any one day is limited.
B)  The bank will inform the firm of the amount that needs to be transferred on a daily basis.
C)  The amount that can be disbursed on any given day is limited to the balance in the account when the bank opens in the morning.
D)  The total number of checks that can be written in any one month is limited.
E)  The amount of the disbursements is limited to the amount the firm has available on its bank line of credit.F) B) and E)
G) B) and D)

Exam 17: Working Capital Management

Which one of the following statements concerning money market securities is correct?

Correct Answer
verified

Which one of the following terms refers to the length of time a firm grants its customers to pay for their purchases?

Correct Answer
verified

Which of the following characteristics apply to U.S.Treasury bills? I.Income taxed at both the federal and state level II.Minimal,if any,default risk III.Marketable,but not liquid IV.Short maturities

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified

Which one of the following is true concerning a controlled disbursement account?

Correct Answer
verified

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

Correct Answer
verified

River City Gifts has an average collection period of 20 days and annual sales of $650,000.What is the average investment in accounts receivable as shown on the balance sheet?

Correct Answer
verified

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?

Correct Answer
verified

What are some of the pros and cons of a JIT inventory management system?

Correct Answer
verified
Pros: reduced investment in inventory,lo...
View Answer

A firm grants credit with terms of 2/5,net 20.The firm's customers have _ days to pay in order to receive a ___ percent discount.

Correct Answer
verified

Exam 17: Working Capital Management

Which one of the following statements concerning money market securities is correct?

Correct AnswerverifiedShow Answer

Which one of the following terms refers to the length of time a firm grants its customers to pay for their purchases?

Correct AnswerverifiedShow Answer

Which of the following characteristics apply to U.S.Treasury bills? I.Income taxed at both the federal and state level II.Minimal,if any,default risk III.Marketable,but not liquid IV.Short maturities

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which one of the following is true concerning a controlled disbursement account?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

River City Gifts has an average collection period of 20 days and annual sales of $650,000.What is the average investment in accounts receivable as shown on the balance sheet?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

What are some of the pros and cons of a JIT inventory management system?

Correct AnswerverifiedPros: reduced investment in inventory,lo...View AnswerShow Answer

A firm grants credit with terms of 2/5,net 20.The firm's customers have ___ days to pay in order to receive a _____ percent discount.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Pros: reduced investment in inventory,lo...
View Answer

A firm grants credit with terms of 2/5,net 20.The firm's customers have _ days to pay in order to receive a ___ percent discount.

Correct Answer
verified