Control Over Cash Disbursements Is Generally More Effective When

question 194

Multiple Choice

Control over cash disbursements is generally more effective when

• A) all bills are paid in cash.
• B) disbursements are made by the accounts payable subsidiary clerk.
• C) payments are made by check.
• D) all purchases are made on credit.

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Definitions:

Price Risk

This refers to the possibility of an investor experiencing losses due to changes in the market price of a security.

Hedge

Hedging involves making an investment to reduce the risk of adverse price movements in an asset, typically by taking an offsetting position in a related security.

Put Option

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Interest Rate

The percentage of a sum of money charged for its use, often expressed on an annual basis.