Question 1

_________ float is a measure which incorporates both the time lag and the dollar amount of remittances.&#10;A)Fed&#10;B)Dollar-day&#10;C)Aggregate&#10;D)Consolidated

Accepted Answer

The term "dollar-day float" is used to refer to the combination of the time it takes for a remittance to clear and the amount of funds in transit. This measurement helps to assess the impact of float on cash flow and liquidity.

Question 2

Cash collection systems include:&#10;A)Company processing centers&#10;B)Lockbox systems&#10;C)Preauthorized payments&#10;D)'a' and 'b'&#10;E)'a' 'b' and 'c'

Accepted Answer

A

Question 3

_________ lockbox systems will likely be phased out as companies increasingly use electronic corporate trade payments.&#10;A)Retail&#10;B)Wholesale&#10;C)Network&#10;D)ACH

Accepted Answer

Wholesale lockbox systems are more likely to be phased out with the increase in electronic corporate trade payments because they are used by businesses to collect payments from other businesses (B2B), which is increasingly being done electronically. Retail lockbox systems, on the other hand, are used for high-volume, low-dollar transactions, often from individuals, and may not be as quickly replaced by electronic payments. ACH (Automated Clearing House) is actually a type of electronic payment system, not a lockbox system, and network does not specifically refer to a type of lockbox system.

Question 4

Fixed costs of collection systems include all of the following EXCEPT:&#10;A)encoding charge&#10;B)Clerical salaries&#10;C)Account maintenance fees&#10;D)'b' and 'c'

Accepted Answer

Fixed costs of collection systems include clerical salaries, account maintenance fees, and encoding charges. Therefore, the only option that is not included in the fixed costs is A, the encoding charge.

Question 5

Each month,your company typically has $1,000,000 and $2,000,000 in remittances with collection floats of 5 and 7 days,respectively.On average,your company's collection float is:&#10;A)6.00 days&#10;B)6.33 days&#10;C)6.50 days&#10;D)6.67 days

Accepted Answer

To calculate the average collection float, we can use the formula: 
(Collection float * Remittance amount) / Total remittance amount

The calculation for the first remittance of $1,000,000 with a collection float of 5 days would be:
(5 * $1,000,000) / $3,000,000 = 1.67 days

The calculation for the second remittance of $2,000,000 with a collection float of 7 days would be:
(7 * $2,000,000) / $3,000,000 = 4.67 days

Adding these two results gives us a total of 6.34 days. 
Rounding to the nearest hundredth gives us 6.33 days, which is the option closest to the calculated value.

Question 6

Which of the following is not a necessary constraint for a linear programming solution to identifying the optimal lockbox setup?&#10;A)decision variables must be binary&#10;B)if a mailing zone is assigned to a lockbox,the cost function must include the fixed cost for that lockbox&#10;C)each mailing zone must be assigned to one lockbox&#10;D)the total number of lockboxes in solution must not exceed 5

Accepted Answer

The total number of lockboxes is not a necessary constraint for identifying the optimal lockbox setup. It may be a constraint imposed by the problem statement, but it is not necessary for finding the optimal solution. The necessary constraints are A, B, and C. The decision variables must be binary because they represent whether a mailing zone is assigned to a lockbox or not. If a mailing zone is assigned to a lockbox, the cost function must include the fixed cost for that lockbox. Each mailing zone must be assigned to one lockbox to ensure that all mail is processed efficiently.

Question 7

Collection float includes the following:&#10;A)Dollar-day&#10;B)Check processing float&#10;C)Availability float&#10;D)'b' and 'c'&#10;E)all of the above (i.e.'a' 'b' and 'c')

Accepted Answer

The answer of Collection float includes the following:&#10;A)Dollar-day&#10;B)Check processing float&#10;C)Availability...

Question 8

Several independent banks operating under a contractual agreement to provide lockbox services for each other's customers comprise:&#10;A)a lockbox consortium&#10;B)multiple processing centers&#10;C)consolidated collection centers&#10;D)an ACH system

Accepted Answer

A lockbox consortium is a group of independent banks that provide lockbox services for each other's customers. This allows customers to have a single point of contact for their lockbox services, even if they have accounts with multiple banks within the consortium. Multiple processing centers and consolidated collection centers are possible components of a lockbox consortium, but they are not the defining feature. An ACH system is a separate electronic payment system that transfers funds between bank accounts.

Question 9

Which of the following is the most popular Lockbox model:&#10;A)The Collection Model&#10;B)The 5.1 Model&#10;C)'a' and 'b'&#10;D)none of the above

Accepted Answer

The most popular Lockbox model is referred to by both names: The Collection Model and The 5.1 Model.

Question 10

The number of site combinations evaluated by the complete enumeration algorithm is equal to:&#10;A)the number of bank sites n multiplied by the number of customer groups.&#10;B)the number of bank sites minus 1.&#10;C)2 times the number of bank sites minus 1.&#10;D)2 raised to the power of the number of bank sites minus 1.

Accepted Answer

The complete enumeration algorithm evaluates all possible combinations of bank sites, including the option of not selecting any site. This means that for each bank site, there are two options (to include or not include it in the solution), except for the last site where there is only one option (to include it). Therefore, the total number of combinations is equal to 2^(number of bank sites - 1).

Question 11

_________ float refers to the delay from the time a check is mailed to the time at which it is received by the payee.&#10;A)Mail&#10;B)Processing&#10;C)Availability&#10;D)Clearance

Accepted Answer

The answer of _________ float refers to the delay from...

Question 12

(An)_________ lockbox system is set up to use standardized invoice materials in large volumes.&#10;A)Retail&#10;B)wholesale&#10;C)network&#10;D)ACH

Accepted Answer

The answer of (An)_________ lockbox system is set up to...

Deck 9: Cash Collection Systems