A Lockbox Plan Is Most Beneficial to Which Firms

question 84

Multiple Choice

A lockbox plan is most beneficial to which firms?

• A) those with widely disbursed manufacturing facilities
• B) those that have a large marketable securities portfolio and cash to protect
• C) those that hold inventories at many different sites
• D) those that have customers who operate in many different parts of the country

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Definitions:

Useful Life

The expected period of time during which an asset is useful to the owning entity and contributes to its cash flows.

Prepaid Rent

It represents payments made for rent before the rental period has occurred, classified as a current asset on the balance sheet.

Adjusting Entry

Journal entries made at the end of an accounting period to update accounts for accruals and deferrals not captured in daily transactions.

Rent Expense

The cost incurred by a company for utilizing a property or equipment for business operations, typically recognized over the period the property is used.