Question 1

A sweep account automatically "sweeps" all funds in a company's checking account above a predetermined minimum into an interest-bearing account,enabling it to keep otherwise idle cash invested until it is needed to cover checks.

Accepted Answer

The answer of A sweep account automatically "sweeps" all funds...

Question 2

The profits your small business is generating are high; however,you never seem to have enough cash to pay your bills on time.Are cash and profit the same thing? Why or why not?

Accepted Answer

The answer of The profits your small business is generating...

Question 3

The end-of-the-month balances for months 1,2,and 3,respectively are:

Accepted Answer

The answer of The end-of-the-month balances for months 1,2,and 3,respectively...

Question 4

Because small business owners often rely on informal procedures for managing cash,they are most likely to become victims of embezzlement and fraud by their employees.

Accepted Answer

Small business owners often have fewer resources to implement strict procedures and controls, making them more vulnerable to fraudulent activities by their employees. The lack of oversight and accountability creates a higher risk for embezzlement and fraud.

Question 5

What steps can a small business owner take to avoid the cash "crunch"?

Accepted Answer

The answer of What steps can a small business owner...

Question 6

Total cash receipts for months 1,2,and 3,respectively are:

Accepted Answer

Total cash receipts for months 1, 2, and 3 are calculated by adding up the cash sales and credit sales collections for each month. So, the total cash receipts are:
Month 1: $17,060 + $2,559 + $19,941 + $1,864 = $41,424
Month 2: $18,200 + $2,730 + $20,472 + $1,994 = $43,396
Month 3: $18,800 + $2,820 + $21,840 + $2,048 = $45,508
Therefore, the answer is D. As for the best choice(s), it is unclear what the question is asking for.

Question 7

From the information provided,prepare a monthly cash budget for the next quarter (October-December)for the Golden Company.

Accepted Answer

The answer of From the information provided,prepare a monthly cash...

Question 8

When trying to prevent employee theft,business owners should create a "police state" environment and trust no one.

Accepted Answer

Creating a "police state" environment at the workplace and trusting no one can create a negative work environment and damage employee morale. Instead, business owners should implement effective prevention measures, such as establishing clear policies and procedures, conducting background checks, and monitoring inventory and financial records, while also fostering a culture of trust and communication with employees.

Question 9

When investing surplus cash,an owner's primary objective should be on the safety and liquidity of the investments.

Accepted Answer

The primary objective of investing surplus funds should be on ensuring the safety and liquidity of the investments, especially if the owner may need the funds in the near future. Maximizing returns should not be the main focus in this situation.

Question 10

Small business managers need not be concerned about investing surplus cash since small amounts of cash sitting around for a few days or weeks are not worth investing.

Accepted Answer

Small business managers should consider investing surplus cash, even if the amount is small, to earn some return on investment instead of letting it sit idle.

Question 11

How much would Rent-A-Nerd have to borrow if its desired minimum cash balance is $4,000?

Accepted Answer

The answer of How much would Rent-A-Nerd have to borrow...

Question 12

Identify the "big three" of cash management.As a small business consultant,what would you recommend your clients do to control the "big three" more effectively?

Accepted Answer

The answer of Identify the "big three" of cash management.As...

Question 13

When investing surplus cash,the small business owner should seek the highest returns possible on the money.

Accepted Answer

While high returns are desirable, the small business owner should also consider the risk associated with the investment, ensuring that it aligns with their risk tolerance and business goals.

Question 14

Why is cash a unique asset? What are the advantages of efficient cash management?

Accepted Answer

The answer of Why is cash a unique asset? What...

Question 15

What steps can a small business owner take to minimize bad debt losses?

Accepted Answer

The answer of What steps can a small business owner...

Question 16

Your friend Jake owns a business that is achieving phenomenal growth.Explain why it is said that: "Fast-growing companies are most likely to experience cash shortages."

Accepted Answer

The answer of Your friend Jake owns a business that...

Question 17

Revising business plans annually forces owners to focus on managing the business more effectively.

Accepted Answer

Revising business plans annually allows owners to reassess their goals, strategies, and performance, and make necessary adjustments to improve the business's overall effectiveness and success. It can help owners stay on track and adapt to changes in the market, industry, or internal organization. Therefore, it promotes better management practices and accountability.

Question 18

How are sales forecasts developed for an established business? How are sales forecasts developed for a new business enterprise?

Accepted Answer

The answer of How are sales forecasts developed for an...

Question 19

What are the basic steps in preparing a cash budget? Which forecast is the "heart" of the cash budget?

Accepted Answer

The answer of What are the basic steps in preparing...

Question 20

In order to deter employee theft,it is best to separate cash management duties between at least two different employees.

Accepted Answer

Separating cash management duties between two different employees will create a system of checks and balances, making it more difficult for one employee to commit theft undetected.

Quiz 12: Managing Cash Flow