|
1.
|
Cash flow is synonymous with
|
|
  Earnings
|
|
|
The movement of money into or out of a business.
|
|
|
Accounting profits
|
|
|
Net income
|
|
|
|
|
2.
|
Factors that contribute to the crests and troughs of cash flow include all EXCEPT:
|
|
|
Non regular disbursement items (equipment purchases)
|
|
|
Seasonal sales
|
|
|
Variations in biweekly payments
|
|
|
Mortgage payments
|
|
|
|
|
3.
|
Way(s) to cut costs do NOT include:
|
|
|
Reduce wages
|
|
|
Reduce investment outlays
|
|
|
Reduce travel costs
|
|
|
Reduce entertainment costs
|
|
|
|
|
4.
|
Objectives of cash management do NOT include:
|
|
|
Reduce the need to borrow
|
|
|
Operate with cash balance as high as possible
|
|
|
Minimize idle cash balances
|
|
|
Maximize the returns on surplus funds
|
|
|
|
|
5.
|
Which of the following is NOT a key factor that determines how much cash you should hold?
|
|
|
Inflation
|
|
|
Current management policy
|
|
|
Rate of return
|
|
|
Risk levels, economic conditions
|
|
|
|
|
6.
|
One way to guard against accumulating excessive balances is to establish
|
|
|
A line of credit
|
|
|
Zero-balance accounts
|
|
|
Reduce the number of accounts
|
|
|
Consolidate the accounts
|
|
|
|
|
7.
|
A small business moves on:
|
|
|
Cash
|
|
|
Profits
|
|
|
Earnings
|
|
|
Contribution margin
|
|
|
|
|
8.
|
If you are to manage cash flows you need to know the difference between accounting profits and:
|
|
|
Fixed assets
|
|
|
Economic profits
|
|
|
Receivables
|
|
|
Depreciation
|
|
|
|
|
9.
|
You can compute and analyze liquidity by:
|
|
|
Current ratio
|
|
|
Return on investment
|
|
|
Inventory turnover
|
|
|
Earnings per share
|
|
|
|
|
10.
|
A high cash ratio of sales to cash (called cash turnover) may reveal:
|
|
|
Excess cash
|
|
|
High return earned
|
|
|
Cash shortage
|
|
|
Turnover
|
|
|
|
|
11.
|
Which of the following is NOT likely an option with surplus (extra) cash?
|
|
|
Pay down debt
|
|
|
Invest in information technology
|
|
|
Buy back own shares
|
|
|
Pay dividends
|
|
|
|
|
12.
|
Cash flow cycles depend on the following factors EXCEPT for:
|
|
|
Vendor credit policy
|
|
|
New advertising
|
|
|
Customer credit terms
|
|
|
Time to receive merchandise from suppliers
|
|
|
|
|
13.
|
The amount of cash balance held does NOT depend on:
|
|
|
The state of the economy
|
|
|
Rate of return that can be earned from marketable securities
|
|
|
Uncertainty associated with cash flow
|
|
|
Speculative demand for securities
|
|
|
|
|
14.
|
Future value is best described as
|
|
|
The sum of receipts discounted to time zero.
|
|
|
The sum of payments discounted to time zero.
|
|
|
The value of a payment or receipts at a future time adjusted for any compounding effect.
|
|
|
A discounted amount of the future sum.
|
|
|
|
|
15.
|
_____________ is NOT a document of cash transactions:
|
|
|
Paid invoices
|
|
|
Inventory in stock
|
|
|
Cancelled checks
|
|
|
Deposit slips
|
|
|
|
|
16.
|
A financial statement includes all of the following items: operating activities, financial activities and investing activities. What financial statement is this?
|
|
|
Statement of cash flows
|
|
|
Balance sheet
|
|
|
Income statement
|
|
|
Statement of retained earnings
|
|
|
|
|
17.
|
Which of the following is NOT part of the typical cash budget?
|
|
|
Contingency section
|
|
|
Receipts section
|
|
|
Disbursement section
|
|
|
Cash surplus or deficit section
|
|
|
|
|
18.
|
Examples of cash expenses do NOT include:
|
|
|
Amortization
|
|
|
Salaries paid
|
|
|
Rent paid
|
|
|
Postage paid
|
|
|
|
|
19.
|
Embezzlement may NOT be indicated by:
|
|
|
Collection delays
|
|
|
Delays in depositing money at the bank
|
|
|
Unexplained shortages of merchandise
|
|
|
Bank reconciliation
|
|
|
|
|
20.
|
To ensure the accuracy of the cash count the audit procedures include:
|
|
|
Inventory investigation
|
|
|
Preparation of a monthly bank reconciliation
|
|
|
Credit verification
|
|
|
Asset verification
|
|
|
|
|
21.
|
_______________________ is NOT a benefit of short-term cash forecast:
|
|
|
Basis for a long-term forecast
|
|
|
Major disposal of assets
|
|
|
Schedule for loan repayments
|
|
|
Cash discounts for early payment to suppliers
|
|
|
|
|
22.
|
Cash forecasting is valuable in
|
|
|
Allocating the sales force
|
|
|
Identifying areas of financial strength or deficiency
|
|
|
Deciding on dividend payments
|
|
|
Determining earnings
|
|
|
|
|
23.
|
_________________ is NOT an example of certain cash flows:
|
|
|
Cash sales
|
|
|
Interest receipts
|
|
|
Rents
|
|
|
Payroll
|
|
|
|
|
24.
|
Which one of the following is NOT a cash management program?
|
|
|
Norton
|
|
|
Quicken
|
|
|
Up your cash flow
|
|
|
Cash Pass
|
|
|
|
|
25.
|
A well-managed accounts payable system should include all EXCEPT:
|
|
|
Evaluate cash flow
|
|
|
Institute a single accounts payable system
|
|
|
Set goals
|
|
|
Establish payment priorities
|
|
|
|
|
26.
|
Sound management of accounts payable includes the following principles EXCEPT for:
|
|
|
Prioritize
|
|
|
Negotiate
|
|
|
Accelerate cash collections
|
|
|
Protect credit rating
|
|
|
|
|
27.
|
Which one of the following is NOT a typical symptom for accounts payable problems:
|
|
|
Aged payables
|
|
|
Early payment of taxes
|
|
|
Hassles from creditors
|
|
|
Interest penalties
|
|
|
|
|
28.
|
When negotiating with vendors for more favorable terms you should never:
|
|
|
Check their honesty and reliability
|
|
|
Ask for their trade secrets
|
|
|
Ask for references from other customers
|
|
|
Ask customers if the quality of merchandise is satisfactory
|
|
|
|
|
29.
|
_______________ is NOT one of cash collection strategies:
|
|
|
Use of return envelopes
|
|
|
Use of merchant credit cards
|
|
|
Invoicing delays
|
|
|
Use of lockbox receivables
|
|
|
|
|
30.
|
A typical list of cash outlays for leased fixed assets does NOT include:
|
|
|
Depreciation
|
|
|
Lease payments
|
|
|
Repairs and maintenance
|
|
|
Insurance
|
|
|
|
|
31.
|
Tactics for delaying payments do NOT include:
|
|
|
Stagger payments
|
|
|
Decentralize the payables' operation
|
|
|
Mail payments late in the day or on Friday
|
|
|
Mail from post offices with limited service
|
|
|
|
|
32.
|
__________ is NOT an advantage of buying assets (or incurring expenses) with debts:
|
|
|
Convenience
|
|
|
Deflationary protection
|
|
|
Safety
|
|
|
Subject to high interest rates
|
|
|
|
|
33.
|
Danger signs of possible collection problems include all EXCEPT:
|
|
|
Legal action for collection against customer by other suppliers
|
|
|
Customer adds more payment options
|
|
|
Customer fails to provide requested financial information
|
|
|
Customer frequently changes suppliers
|
|
|
|
|
34.
|
__________________ is NOT a source of credit information:
|
|
|
Suppliers
|
|
|
Credit bureaus
|
|
|
Trade association
|
|
|
Credit reports
|
|
|
|
|
35.
|
The bank balance is adjusted for items reflected on your records that are not on the bank statement. They include:
|
|
|
Outstanding checks
|
|
|
Bank charges
|
|
|
Errors on the books
|
|
|
Collections
|
|
|
|
|
36.
|
____________________ is NOT a type of delay in processing checks:
|
|
|
Mail float
|
|
|
Disbursement float
|
|
|
Processing float
|
|
|
Deposit collection float
|
|
|
|
|
37.
|
Electronic Funds Transfer (EFT) can be linked electronically via communication networks EXCEPT for:
|
|
|
Teleprompter
|
|
|
Telephone
|
|
|
Computer terminals
|
|
|
Personal computers
|
|
|
|
|
38.
|
A retail lockbox offers the following advantages EXCEPT for:
|
|
|
Can be costly to install
|
|
|
Reduced float
|
|
|
Transfers workload from your business to the bank
|
|
|
Reduces expenses
|
|
|
|
|
39.
|
Checks used to transfer money between bank accounts are called:
|
|
|
Certified checks (CC)
|
|
|
Letters of credit (LC)
|
|
|
Depository transfer checks (DTC)
|
|
|
Automatic teller machines (UTM)
|
|
|
|
|
40.
|
A lock-box system
|
|
|
Reduces the need for compensating balances.
|
|
|
Accelerates the inflow of funds.
|
|
|
Provides security for late night deposits.
|
|
|
Reduces the risk of having checks lost in the mail.
|
|
|
|
|
41.
|
To receive cash sooner do NOT use the following:
|
|
|
Automatic deposits to your bank account
|
|
|
File taxes early for refunds
|
|
|
File your insurance claim at the end of the year
|
|
|
Receive child support rather than alimony
|
|
|
|
|
42.
|
To select a particular way of financing you should NOT consider:
|
|
|
Timing
|
|
|
Maturity
|
|
|
Cost
|
|
|
Risk and restrictions
|
|
|
|
|
43.
|
Examples of liquid securities include all EXCEPT:
|
|
|
US treasury bills
|
|
|
Real estate
|
|
|
US treasury notes and bonds
|
|
|
Short-term commercial paper
|
|
|
|
|
44.
|
Which one of the following provides the best source of financing for a firm?
|
|
|
Trade credit (accounts payable).
|
|
|
Bank loans.
|
|
|
Accounts receivable.
|
|
|
Leasing.
|
|
|
|
|
45.
|
Factoring of accounts receivable is:
|
|
|
Discounting accounts receivables with recourse
|
|
|
Restricting the rate of return on accounts receivable
|
|
|
Outright sale of accounts receivable without recourse
|
|
|
Partial sale of accounts receivable with recourse
|
|
|
|
|
46.
|
The 5 C’s of credit do NOT include:
|
|
|
Character
|
|
|
Convention
|
|
|
Capacity
|
|
|
Collateral and capital
|
|
|
|
|
47.
|
Criteria lenders generally use include all EXCEPT:
|
|
|
Healthy cash flow
|
|
|
Unsecured loans
|
|
|
Operational influences
|
|
|
Lending against inventory and receivables
|
|
|
|
|
48.
|
To secure a bank loan you should:
|
|
|
Enlarge your balance sheet
|
|
|
Set the distance between you and the crowd
|
|
|
Cook your earnings
|
|
|
Disclose all your liquidity problems
|
|
|
|
|
49.
|
Zero balance accounts (ZBAs) are special checking accounts with the following benefit:
|
|
|
Extending a disbursement float
|
|
|
Overdraft potential
|
|
|
Bank charge for the service
|
|
|
Excessive balance in multiple accounts
|
|
|
|
|
50.
|
____________________ is a certified cash/treasury manager:
|
|
|
|
