An Important Reason for Imposing a Minimum Cash Balance in the Cash

question 1

Multiple Choice

An important reason for imposing a minimum cash balance in the cash budget is:

• A)it provides a cushion that can absorb forecast errors.
• B)it provides extra funds for managers to spend.
• C)it makes the balance sheet look better.
• D)All of the answers are correct.

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Definitions:

Implied Warranty

A legal assumption that goods are fit for the purpose for which they were sold, even if not explicitly stated.

Merchantability

A warranty that a product sold will meet reasonable expectations of the buyer, including that it is of average acceptable quality and is fit for the purpose for which it is sold.

Defective

Pertaining to a lack of perfection, flaws, or deficiencies in a product, service, or legal document that impair its quality, functionality, or legality.

Security Interest

Any interest “in personal property or fixtures which secures payment or performance of an obligation” [UCC 1–201(37)].