Deck 11: Cash Disbursement Systems

Question 1

A centralized disbursement system results in:

A)Efficiency
B)Control
C)cost savings
D)all of the above
E)none of the above

Answer 1

D

Question 2

A bank service that offers detailed "checks outstanding" information along with the "checks paid" data (based on company-supplied check issue detail)is called

A)paid-only reconciliation
B)comprehensive reconciliation
C)range reconciliation
D)full reconciliation

Answer 2

D

Question 3

A recent amendment to Fed regulation whereby any bank may present a check for payment to any pay bank by 8:00 A.M.local time and be paid by the close of the business day is

A)Expedited Settlement
B)Same-Day Settlement
C)Regulation CC
D)Regulation D

Answer 3

B

Question 4

For the Williams Company in the previous question,what is minimum number of payments per month in order to justify the cost to convert to ACH disbursing?

A)300
B)487
C)531
D)834
E)928

Question 5

An insurance company wishing to maintain control over field disbursements would be a prime candidate for the use of

A)checks
B)vouchers
C)ACH debits
D)Drafts

Question 6

A company that has small daily cash flows,minimal computer facilities,and untrained treasury personnel,would tend to use a disbursement system that is

A)manual and paper-based
B)automated and ACH-based
C)totally outsourced to a bank or other third-party
D)none of the above

Question 7

Guiding principles for corporate disbursement system decisions include each of the following EXCEPT:

A)information should be accurate and timely
B)balances in disbursement accounts should be minimized
C)the value of payment timing should be maximized
D)individual service costs should be minimized

Question 8

Even now remote disbursing practices by corporations in the U.S.are best characterized as

A)widely used by all corporations
B)widely used by large corporations
C)used by companies with cash management expertise
D)very rarely used

Question 9

Less than half of the surveyed cash managers viewed the following disbursement practice(s)as unethical:

A)Altered checks
B)Uncollected Funds 1
C)Rotating disbursement points
D)'b' and 'c'

Question 10

Greenwich survey data indicate the most popular electronic payment application is:

A)dividend and interest payments
B)travel and entertainment reimbursement payments
C)payroll
D)pension payments

Question 11

The three major delays which together comprise disbursement float are:

A)mail float,processing float,availability float
B)mail float,availability float,clearing slippage float
C)mail float,processing float,clearance float
D)none of the above

Question 12

In the 1970s,remote disbursing practices in the U.S.were best characterized as

A)widely used by corporations
B)used by customers in remote locations
C)used only by companies with cash management expertise
D)very rarely used

Question 13

Which of the following payment methods is usually more appropriate for non-recurring payments to individuals?

A)draft
B)check
C)'a' and 'b' are equally appropriate
D)electronic funds transfer

Question 14

Most of the surveyed cash managers viewed the following disbursement practices as unethical EXCEPT:

A)Altered checks
B)Float enhancement
C)Uncollected funds 2
D)'a' and 'c'

Question 15

Which corporate ACH format normally settles in two business days rather than the next day:

A)Prearranged payments and deposits (PPD)
B)Cash concentration or disbursements (CCD)
C)CCD plus addenda (CCD +)
D)Corporate trade exchange (CTX)

Question 16

In the late 1990s,the primary issue here is whether the disbursing banks' capabilities include:

A)controlled disbursement accounts
B)zero balance accounts
C)on-line account access
D)EDI-capability

Question 17

Who originates an ACH debit? An ACH credit?

A)the payor,the payee
B)the payor,the payor
C)the payee,the payor
D)the payee,the payee
E)none of the above are correct

Question 18

The Williams Company can convert to ACH disbursing for $20,000.Williams averages a perpetual 500 checks per month and has an annual cost of capital of 10%.If ACH disbursing will save Williams 20 cents per payment,what is the NPV of the decision to convert to ACH?

A)-$10,000
B)-$8,000
C)-$3,000
D)$2,000
E)$4,000