Effective Cash Management Involves Applying All of the Following Cash

question 152

Multiple Choice

Effective cash management involves applying all of the following cash management principles except:

• A) Encourage collection of receivables, offer discounts for payments received early.
• B) Keep only necessary levels of assets.
• C) Plan expenditures.
• D) Leave excess cash available for unexpected expenditures.
• E) Delay payment of liabilities until the last possible day.

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Definitions:

Sunk Costs

Expenses that have already been incurred and cannot be recovered, which should not influence future business decisions.

Replacement Projects

Investments made to replace worn-out or obsolete assets with new assets.

Expected Savings

Expected savings refer to the projected amount of money saved over a specific period due to cost reduction strategies, efficiencies, or bargain purchases.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decline in the asset's value over time.