Which of the Following Statements Is Correct

question 70

Multiple Choice

Which of the following statements is correct?

• A) Poor synchronization of cash flows that results in high cash management costs can be partially offset by increasing disbursement float and decreasing collections float.
• B) The size of a firm's net float is primarily a function of its natural cash flow synchronization and how it clears its checks.
• C) Lockbox systems are used mainly for security purposes as well as to decrease the firm's net float.
• D) If a firm can speed up its collections and slow down its disbursements,it will be able to reduce its net float.
• E) A firm practicing good cash management and making use of positive net float will bring its check book balance as close to zero as possible,but must never generate a negative book balance.

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Definitions:

US Dollar Depreciates

US Dollar depreciates refers to the decline in the value of the US Dollar relative to other currencies, which can affect international trade and economic relationships.

US Exports

Refers to goods and services produced in the United States that are sold to other countries.

Foreigners

Individuals or entities from a different country than the one being referred to, often used in contexts discussing economic, social, or political impacts.

US Dollar Appreciates

An increase in the value of the US dollar relative to other currencies, making foreign goods and services cheaper for US consumers and US exports more expensive for foreign buyers.