The Amount of Cash a Firm Holds to Counter the Uncertainty

question 9

Multiple Choice

The amount of cash a firm holds to counter the uncertainty surrounding its future cash needs is known as a(n) :

• A)speculative balance.
• B)compensating balance.
• C)operating balance.
• D)precautionary balance.

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Definitions:

Weighted Average Method

An inventory costing method that averages out all costs of inventory available for sale during the period and assigns an average cost to each unit sold.

Applied Overhead

An accounting method that allocates estimated overhead costs to specific jobs or production units based on a predetermined rate or formula.

Direct Labor

Wages or costs directly associated with workers who are involved in the production of goods or services.

Continuous Process

A manufacturing or production process that operates without interruption, typically in industries where the product is produced in a flow rather than discrete units.