Which one of the following represents a use of cash?

Decrease in inventory
Sale of preferred stock
Decrease in accounts receivable
Decrease in accounts payable

The operating cycle is based on the:

Cash cycle plus Accounts Receivable period
Inventory period plus Accounts Receivable period
Accounts Payable period minus Cash cycle
Accounts Payable period minus Accounts Receivable period

If your company decides it needs to pay its suppliers 7 days sooner than it normally does, then:

its payable turnover rate will decrease.
its accounts receivable period will increase.
it may require additional funds from other sources to fund the cash cycle.
its cash cycle will decrease.

Which of the following is indicative of a short-term restrictive financial policy?

Purchasing inventory only as needed
Granting credit to more customers
Increased investment in marketable securities
Maintaining a large accounts receivable balance

Stevic Industries is a seasonal firm specializing in pool furniture. Stevic purchases inventory one month before it is sold and

pays for its purchases 60 days after the invoice date. Sales are highest during July and August. For purposes of preparing the firm's cash budget, which of the following is correct?

Inventory purchases will be highest during the months of July and August.
Inventory purchases will be highest during the months of May and June.
Payments to suppliers will be highest during the months of July and August.
Payments to suppliers will be highest during the months of August and September.

A zero-balance account (ZBA):

is used to cover the compensating balance requirement of a line of credit agreement.
is funded on an as-needed basis only.
is only used to deposit funds received at local lockboxes.
requires a compensating balance.

Money market securities have which of the following characteristics?

I. long maturities			III. high degree of liquidity
II. low default risk			IV. low rates of return
I and III only
II and III only
II, III, and IV only
I, II, III, and IV

A lockbox system:

entails the use of a bank which is centrally located to collect payments on a nationwide basis.
is designed to deposit a customer's check into the firm's bank account prior to recording the
receipt of that check to a customer's account.
is used to reduce the disbursement float of a firm.
automatically records payments to a customer's account when the customer's check is received
at the lockbox location.

Erie County Savings & Loan has branch operations in three states. Each branch deals with a local bank. However, all excess

funds in these branch bank accounts are transferred on a daily basis to the firm's primary bank located near the firm's home office. This routine of transferring cash to the primary bank on a regular basis is referred to as:

cash concentration.
strategic cash disbursement.
transfer flotation.
float management.

Which of the following will reduce collection time?

I. billing customers by mail rather than electronically
II. accepting debit cards but not checks as payment for a sale
III. offering cash discounts for early payment
IV. reducing the processing delay by one day

I and II only
II and III only
I, II, and III only
II, III, and IV only