One Way a Firm Can Reduce the Amount of Cash

question 53

Multiple Choice

One way a firm can reduce the amount of cash it needs in any one month is to

• A) slow down the payment of receivables.
• B) speed up payment of accounts payable.
• C) delay the payment of wages.
• D) accrue taxes.

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Definitions:

Fair Value

An accounting term referring to the estimated worth of an asset or liability based on current market conditions.

Consolidated Gross Profit

The total gross profit of a company and its subsidiaries before deducting any operating expenses, interest, and taxes, reported in the consolidated financial statements.

Transfer Price

The price used for the sale or transfer of goods and services between divisions within the same company, often used for accounting and tax purposes.

Inventory Costing

The method used to value and account for inventory, including approaches such as LIFO, FIFO, and weighted average cost.