Question 1

One of the major cost savings for consumers using automated clearinghouses is

Accepted Answer

A)   saving great amounts of money on postage.
B)   saving time paying bills through check writing.
C)   the security of having the payments and deposits directly deposited or deducted from your account.
D)   All of the options are true.E) B) and D)
F) B) and C)

Question 2

Finding out who is ultimately responsible for a bad debt can be helped by Dun & Bradstreet's D-U-N-S (Data Universal Number System) that tracks relationships and the ownership of businesses within Dun & Bradstreet's information base.

Accepted Answer

A) True 
 B)False

Question 3

The system whereby funds are moved between computer terminals without use of checks is

Accepted Answer

A)   electronic funds transfer.
B)   float.
C)   a lock-box system.
D)   magnetic character recognition.E) A) and B)
F) B) and C)

Question 4

Checks can be cleared only through the Federal Reserve System.

Accepted Answer

A) True 
 B)False

Question 5

The corporate sweep account is an account

Accepted Answer

A)   that allows companies to maintain zero balances in their checking accounts, with their excess cash moved into an interest-earning account.
B)   that allows companies to write checks on zero balance accounts with the understanding that when the check is presented for payment, money will be moved from the interest-bearing account to the appropriate payment account.
C)   that allows companies to move their lockbox collections into an interest-bearing checking account.
D)   that allows companies to maintain zero balances in their checking accounts, with their excess cash moved into an interest-earning account and lets companies write checks on zero balance accounts with the understanding that when the check is presented for payment, money will be moved from the interest-bearing account to the appropriate payment account.E) All of the above
F) A) and C)

Question 6

Which of the following is the most liquid asset?

Accepted Answer

A)   Prepaid expenses
B)   Inventory
C)   Cash equivalents
D)   Accounts receivableE) None of the above
F) B) and D)

Question 7

Just-in-time inventory management typically pushes the cost of holding inventory from the manufacturer to the manufacturer's suppliers.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following should require the highest rate of return?

Accepted Answer

A)   90 day Certificate of deposit
B)   Money market that can be liquidated at anytime
C)   120 day Treasury bill
D)   Accounts receivable usually collected in 30 daysE) B) and D)
F) B) and C)

Question 9

Inventories are usually the most liquid, but lowest-yielding, current asset of a firm.

Accepted Answer

A) True 
 B)False

Question 10

Automated clearinghouses are commonly used by consumers to make direct payments for

Accepted Answer

A)   insurance premiums.
B)   mortgage payments.
C)   utility bills.
D)   All of the options are true.E) A) and C)
F) B) and C)

Question 11

Inventory is usually divided into three basic categories except

Accepted Answer

A)   projected sales.
B)   work in process.
C)   finished goods.
D)   raw materials.E) B) and C)
F) A) and D)

Question 12

It is less expensive to clear a check through the Federal Reserve System than to process an automatic fund transfer through an automated clearinghouse.

Accepted Answer

A) True 
 B)False

Question 13

Proper management of sales, receivables, payables, and inventory form the basis of cash flow.

Accepted Answer

A) True 
 B)False

Question 14

The two basic costs associated with inventory are production cost and ordering cost.

Accepted Answer

A) True 
 B)False

Question 15

For most firms, the primary motive for holding cash is the transaction motive.

Accepted Answer

A) True 
 B)False

Question 16

Multinational firms find it difficult to shift funds from one country to another.

Accepted Answer

A) True 
 B)False

Question 17

Money market funds are

Accepted Answer

A)   accounts that allow small investors to participate in buying large-denomination securities.
B)   extremely risky but high-yielding accounts used by large corporations to finance operations.
C)   accounts that allow small investors to buy shares in companies that then buy shares of common stock.
D)   pools of bonds held by large utility companies.E) B) and C)
F) B) and D)

Question 18

A multinational company may prefer to hold sizeable cash balances in one currency rather than another because

Accepted Answer

A)   of high interest rates existing in one country.
B)   one country's currency may be weak relative to the other.
C)   the company is looking to do business in the country with that currency in the future.
D)   all of the options are true.E) B) and D)
F) B) and C)

Exam 7: Current Asset Management

Which of the following should require the highest rate of return?

Correct Answer
verified

Inventory is usually divided into three basic categories except

Correct Answer
verified

Which of the following is the most liquid asset?

Correct Answer
verified

For most firms, the primary motive for holding cash is the transaction motive.

Correct Answer
verified

The system whereby funds are moved between computer terminals without use of checks is

Correct Answer
verified

Automated clearinghouses are commonly used by consumers to make direct payments for

Correct Answer
verified

It is less expensive to clear a check through the Federal Reserve System than to process an automatic fund transfer through an automated clearinghouse.

Correct Answer
verified

Just-in-time inventory management typically pushes the cost of holding inventory from the manufacturer to the manufacturer's suppliers.

Correct Answer
verified

Proper management of sales, receivables, payables, and inventory form the basis of cash flow.

Correct Answer
verified

A multinational company may prefer to hold sizeable cash balances in one currency rather than another because

Correct Answer
verified

The two basic costs associated with inventory are production cost and ordering cost.

Correct Answer
verified

One of the major cost savings for consumers using automated clearinghouses is

Correct Answer
verified

Multinational firms find it difficult to shift funds from one country to another.

Correct Answer
verified

The corporate sweep account is an account

Correct Answer
verified

Money market funds are

Correct Answer
verified

Checks can be cleared only through the Federal Reserve System.

Correct Answer
verified

Inventories are usually the most liquid, but lowest-yielding, current asset of a firm.

Correct Answer
verified

Finding out who is ultimately responsible for a bad debt can be helped by Dun & Bradstreet's D-U-N-S (Data Universal Number System) that tracks relationships and the ownership of businesses within Dun & Bradstreet's information base.

Correct Answer
verified

Exam 7: Current Asset Management

Which of the following should require the highest rate of return?

Correct AnswerverifiedShow Answer

Inventory is usually divided into three basic categories except

Correct AnswerverifiedShow Answer

Which of the following is the most liquid asset?

Correct AnswerverifiedShow Answer

For most firms, the primary motive for holding cash is the transaction motive.

Correct AnswerverifiedShow Answer

The system whereby funds are moved between computer terminals without use of checks is

Correct AnswerverifiedShow Answer

Automated clearinghouses are commonly used by consumers to make direct payments for

Correct AnswerverifiedShow Answer

It is less expensive to clear a check through the Federal Reserve System than to process an automatic fund transfer through an automated clearinghouse.

Correct AnswerverifiedShow Answer

Just-in-time inventory management typically pushes the cost of holding inventory from the manufacturer to the manufacturer's suppliers.

Correct AnswerverifiedShow Answer

Proper management of sales, receivables, payables, and inventory form the basis of cash flow.

Correct AnswerverifiedShow Answer

A multinational company may prefer to hold sizeable cash balances in one currency rather than another because

Correct AnswerverifiedShow Answer

The two basic costs associated with inventory are production cost and ordering cost.

Correct AnswerverifiedShow Answer

One of the major cost savings for consumers using automated clearinghouses is

Correct AnswerverifiedShow Answer

Multinational firms find it difficult to shift funds from one country to another.

Correct AnswerverifiedShow Answer

The corporate sweep account is an account

Correct AnswerverifiedShow Answer

Money market funds are

Correct AnswerverifiedShow Answer

Checks can be cleared only through the Federal Reserve System.

Correct AnswerverifiedShow Answer

Inventories are usually the most liquid, but lowest-yielding, current asset of a firm.

Correct AnswerverifiedShow Answer

Finding out who is ultimately responsible for a bad debt can be helped by Dun & Bradstreet's D-U-N-S (Data Universal Number System) that tracks relationships and the ownership of businesses within Dun & Bradstreet's information base.

Correct AnswerverifiedShow Answer

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