Which of the Following Statements Is CORRECT

question 3

Multiple Choice

Which of the following statements is CORRECT?

• A) If cash inflows from collections occur in equal daily amounts but most payments must be made on the 10th of each month, then a regular monthly cash budget will be misleading.The problem can be corrected by using a daily cash budget.
• B) Sound working capital policy is designed to maximize the time between cash expenditures on materials and the collection of cash on sales.
• C) If a firm wants to generate more cash flow from operations in the next month or two, it could change its credit policy from 2/10 net 30 to net 60.
• D) If a firm sells on terms of net 90, and if its sales are highly seasonal, with 80% of its sales in September, then its DSO as it is typically calculated (with sales per day = Sales for past 12 months/365) would probably be lower in October than in August.
• E) Depreciation is included in the estimate of cash flows (Cash flow = Net income = Depreciation); hence depreciation is set forth on a separate line in the cash budget.

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Definitions:

On-Demand Entertainment

Entertainment services and content that can be accessed anytime and anywhere by the user, typically through digital platforms and streaming services.

BPI

This approach, known as Business Process Improvement, helps organizations refine their essential procedures to yield more efficient performance.

BPR

Business Process Reengineering, a strategic approach that organizations use to improve their workflows and efficiency significantly.

BPI

Through Business Process Improvement, organizations adopt a structured approach to advance their primary processes for better efficiency results.