Which of the following practices best illustrates efficient management of cash?
A)The accountant records all cash receipts and payments when reconciling the bank account at the end of each month.
B)Management arranges for a loan to cover projected cash shortages during the production phase of the business cycle each year.
C)Cash budgets (forecasts)are prepared only one month in advance in order to avoid the need for constant revision.
D)All cash resources are held in the checking account to maximize liquidity.

Question

Quizplus · Accepted Answer

Arranging for a loan to cover projected cash shortages during the production phase each year is an efficient cash management practice because it ensures that the business has the necessary funds to continue operations without interruption, thereby avoiding potential cash flow problems.

Which of the Following Practices Best Illustrates Efficient Management of Cash