Which of these represents a transaction motive for holding cash?
A)Buying extra inventory in response to an unexpected sale offered by a supplier
B)Distributing the weekly paychecks
C)Increasing the minimum cash balance for the firm's main bank account
D)Unexpectedly purchasing a competitor's firm
E)Holding cash in anticipation that the firm may need to close for a few days if floodwaters keep rising

Question

Quizplus · Accepted Answer

The transaction motive for holding cash refers to the need to have cash on hand to meet routine, predictable expenses such as payroll, which is represented by distributing weekly paychecks.

Which of These Represents a Transaction Motive for Holding Cash