Which of the Following Practices Contributes to Efficient Cash Management

question 164

Multiple Choice

Which of the following practices contributes to efficient cash management?

• A) Never borrow money-maintain a cash balance sufficient to make all necessary payments.
• B) Record all cash receipts and cash payments at the end of the month when reconciling the bank statements.
• C) Prepare monthly forecasts of planned cash receipts, payments and anticipated cash balances up to a year in advance.
• D) Pay each bill as soon as the invoice arrives.

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Definitions:

Residential Rental Properties

Real estate properties that are leased or rented out to individuals to live in, as opposed to commercial properties.

Flow-Through Entities

Business entities that pass their income, deductions, and credits down to their owners for tax purposes, avoiding taxation at the corporate level.

LLC's

Stands for Limited Liability Companies, a business structure in the U.S. that offers personal liability protection to its owners but can be taxed as a partnership.

S Corporations

A special designation of corporation that allows income to be taxed only at the shareholder level, avoiding double taxation.