When a Company Faces Uncertainty It Is Common for Managers

question 8

Multiple Choice

When a company faces uncertainty it is common for managers to attempt to build up cash reserves.Which of the following is an important advantage of having large cash balances on hand?

• A)Cash balances pay significant interest, enabling a company to receive additional revenue.
• B)Having large cash balances enables a company to pay its bills even when sales are dropping.
• C)A cash account will increase in value when equity markets go up in value.
• D)Corporate shareholders generally approve of large corporate cash balances, believing that corporate managers are acting prudently.

Recognize the advantages and disadvantages of implementing an ERP system in an organization.

Understand the process and benefits of batch processing and real-time processing (OLTP) in transaction management.

Understand the calculation and interpretation of financial ratios.

Understand the principles of liquidity and how transactions affect it.

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Definitions:

Original Entry

The initial recording of a financial transaction in the accounting records or journal.

General Journal

A basic accounting record where all types of transactions are initially recorded before being posted to specific accounts in the general ledger.

General Ledger

A complete record of all financial transactions over the life of a company.

Debit Balances

Accounts on the left-hand side of a double-entry bookkeeping system that typically signify assets or expenses.