Analysis of the Flow of Information

question 17

Multiple Choice

Analysis of the flow of information

• A) is necessary only if management wants tight control of the system.
• B) is more important than materials flow.
• C) should always accompany an analysis of materials flow.
• D) is of concern only to service industries.

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Definitions:

Transaction Motive

The need for cash to meet immediate and anticipated demands for payment, a key reason for holding cash in business.

Speculative Motive

The intention to hold cash or other assets in anticipation of future market fluctuations to gain financial advantages.

Collection Float

The time period between when a check is deposited and when the funds become available in the recipient's account, affecting the cash flow and liquidity.

Float Management

The practice of managing the time between when a check is deposited and when it clears, to optimize the use of funds.