Which of the Following Statements Are Correct Concerning the Cash

question 9

Multiple Choice

Which of the following statements are correct concerning the cash balance of a firm?
I. Most firms plan on maintaining a minimum cash balance at all times.
II. The cumulative cash surplus shown on a cash budget is equal to the ending cash balance plus the minimum cash balance retained by the firm.
III. The cumulative cash surplus at the end of March is used as the beginning cash balance for April when you are compiling a projected monthly cash balance report.
IV. A negative cumulative cash surplus indicates a borrowing need by the firm.

• A) I and III only
• B) II and IV only
• C) I and IV only
• D) II and III only
• E) I and II only

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Definitions:

Safe Harbor

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Internal Revenue Code

The codified collection of tax laws in the United States that govern federal tax obligations and procedures.

Tax Payment

The act of paying taxes owed to the government, which can be related to income, property, sales, or other forms of taxation.

Internal Revenue Service

The federal agency responsible for administering and enforcing tax laws in the United States.