Which of the Following Practices Best Illustrates Efficient Management of Cash

question 63

Multiple Choice

Which of the following practices best illustrates efficient management of cash?

• A)The accountant records all cash receipts and payments when reconciling the bank account at the end of each month.
• B)Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year.
• C)Cash budgets (forecasts)are prepared only one month in advance in order to avoid the need for constant revision.
• D)All cash resources are held in the checking account to maximize liquidity.

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Definitions:

Ending Inventory

At the close of an accounting cycle, the valuation of products set for sale, computed by taking the initial inventory, adding the acquisitions, and deducting the cost of goods sold.

Reported Net Income

The final profit figure stated in a company's financial statements, as reported to shareholders and used for earnings per share calculations.

Accrued Payroll

Salaries and wages that have been earned by employees but have not yet been paid by the company.

Consolidated Statements

Financial statements that present the assets, liabilities, equity, income, expenses, and cash flows of a parent company and its subsidiaries as a single entity.