Which Statement Best Describes Cash Management

question 113

Multiple Choice

Which statement best describes cash management?

• A)A good cash management system minimizes disbursement float and maximizes collections float.
• B)If a firm begins to use a well-designed lockbox system, this will reduce its customers' net float.
• C)If Firm A can get its suppliers to permit it to pay by wire transfers rather than sending cheques through the mail, this would increase Firm A's net float and thus reduce its investment in cash.
• D)A highly efficient cash management system can enable a firm to always have a positive net float and a negative chequebook balance, and still not have its cheques bounce.

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Definitions:

Unearned Income

Income received from sources other than employment, such as investments, including interest, dividends, and capital gains.

Farmland

Land that is used or suitable for agricultural purposes, such as growing crops or raising livestock.

Technological Advances

Refers to progress in scientific knowledge that enhances or improves technology, making processes more efficient, products more useful, or services more accessible.

Output Effect

The possibility that when the price of the first of a pair of substitute resources falls, the quantity demanded of both resources will increase.