A cash balance held in reserve for unforeseen fluctuations in cash flows is called a _____ balance.

Question

Quizplus · Accepted Answer

A precautionary balance is held in reserve for unforeseen fluctuations in cash flows. Transactions balances are used for regular business operations, compensating balances are used to secure a loan, speculative balances are invested to earn a return, and a lockbox is a service used to expedite the collection of cash receipts.

A Cash Balance Held in Reserve for Unforeseen Fluctuations in Cash