GT Motors Regularly Issues Short-Term Debt to Finance Its Daily

question 69

Multiple Choice

GT Motors regularly issues short-term debt to finance its daily operations.Suddenly,the credit markets froze and no funds were available for borrowing.Fortunately,the firm had some cash reserves saved that it was able to use to fund its operations until additional credit was available.The need to retain cash for situations such as this is referred to as which one of the following motives for holding cash?

• A)speculative
• B)float
• C)compensating
• D)precautionary
• E)transaction

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Definitions:

Cost Control

A process of managing and monitoring expenses to keep business operations within a budget.

Responsibility Accounting

A system of accounting which holds individuals or departments accountable for costs and expenses under their control.

Sales Manager

A professional responsible for leading and directing a sales team to meet or exceed sales targets.

Manufacturing Costs

The total expenses involved in the process of producing goods, including raw materials, labor, and overhead costs.