Efficient management of cash includes which of the following concepts?
A) Pay each bill as soon as the invoice is received.
B) Deposit all cash receipts and make all cash disbursements at the end of each week.
C) Prepare monthly cash budgets (forecasts) up to a year in advance.
D) Pay suppliers in cash out of cash sales receipts before depositing them in the bank.

Question

Quizplus · Accepted Answer

Preparing monthly cash budgets (forecasts) up to a year in advance is an important concept in efficient cash management. This allows the business to anticipate any upcoming cash deficits or surpluses and make adjustments to prevent any negative impacts. Paying bills as soon as they are received (A) may not always be necessary or feasible, and it may be more practical to wait until a certain date to make all payments. Depositing all cash receipts and making all cash disbursements at the end of each week (B) may cause unnecessary delays in receiving and spending cash. Paying suppliers in cash out of cash sales receipts before depositing them in the bank (D) may not always be the best option, as it may lead to a potential cash shortfall if unexpected expenses arise.

Efficient Management of Cash Includes Which of the Following Concepts