Which of the Following Scenarios Is an Example of the Transactions

question 61

Multiple Choice

Which of the following scenarios is an example of the transactions motive to hold cash?

• A)An oil company saves abnormally high earnings as cash on its balance sheet which it will use to buy another oil company.
• B)A manufacturing company holds cash to pay its suppliers for raw materials.
• C)An airline keeps a reserve of cash during the winter months in case it has to pay customers a refund because bad weather results in a cancellation of flights.
• D)A firm holds cash to pay its annual dividend.

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Definitions:

Entrepreneurship

The activity of setting up a business or businesses, taking on financial risks in the hope of profit.

Work Habits

The behaviors and practices that individuals routinely engage in during their professional tasks, affecting productivity and job performance.

Believing

involves accepting something as true or having confidence in the truth, existence, or reliability of something without direct proof.

Risks

The potential for loss or harm when undertaking an action.