Which of the Following Firms Would Be Expected to Need

question 5

Multiple Choice

Which of the following firms would be expected to need the most cash to conduct its daily operations?

• A) a retail grocery store that sells on a cash only basis
• B) an electronics manufacturer that only assemble its goods once they have been paid for
• C) an airline that has many of its fares pre-paid by cash or credit card
• D) an aircraft manufacturer with large inventory and long development and sales cycles

---

Definitions:

CPA Firm

A company that provides accounting, auditing, tax, and business consulting services, staffed by certified public accountants (CPAs).

Ultramares Rule

A legal doctrine limiting the liability of auditors to third parties in cases of negligence, unless a prima facie case of fraud could be proven.

Primary Benefit Test

A legal principle used to determine who is primarily benefited by a service or transaction, often applied in labor law and contract disputes.

Common Law Negligence

A legal principle that imposes a duty to act with the care and diligence that a reasonably prudent person would under the same circumstances, where failure to do so results in harm or damage to another.