Cash Management Flashcards
Which of the following long term bonds should have the highest interest rate?
Corporate AAA bonds
Money market securities have all the following characteristics except they are NOT
A. Short term
B. Cash - answer
C. Low risk
D. Very liquid
Item should be included in a Cash flow budget
Interest payments
Receipts from a share issue
Dividend payment
These statements, about establishing the trend of a time series is TRUE.
Where the time series is approximately linear, the line of best fit can be estimated on a scatter diagram.
Where the time series is not approximately linear, moving averages can be calculated.
Task related to cash handling need to be separated( i.e. the same employee cannot perform both tasks), in order to prevent fraud from being committed and concealed?
Access to liquid assets
Recording of transactions
Over-trading
Over-capitalisation
Over-trading can occur when a business has insufficient working capital
Over-capitalisation can occur when a business has too much working capital.
Objectives of cash budgeting
To anticipate cash shortages and surpluses.
To enable necessary funds to be made available.
Pie chart/line graph
Set 1: contribution of each sales region towards the company’s total sales in the last year.
Set 2 : company’s annual total sales for each of the past five years
Set 1 pie chart
Set 2 line graph
Items are treated differently in cash accounting compared with accruals accounting?
Depreciation
Sales income
Expenditure on materials
Unbudgeted events could lead to a favourable cash flow variance
Extended credit given to suppliers
Payments to suppliers of finance include:
i) Dividends
ii) Interest
iii) Payments of trade creditors
iv) Drawings
i), ii), iv)
Feature of certificates of deposit
Fixed term
Issued by a bank
Negotiable
Specified interest rate
Which of the following statements explain how a cash budget can be used as a mechanism for control?
1) actual cash flows can be compared with budgeted cash flows to reveal variations from what was expected.
2) Cash budgets can be revised on a regular basis for forecasting purposes.
1 only
