WC part 2 Flashcards
1
Q
A lockbox most likely
A
minimize collection float for receivables management
2
Q
A system that expedites cash inflows by having a bank receive payments from customers
A
Lockbox
3
Q
Concentration banking is
A
A method by which a single bank is designated as a central bank to control receipts
4
Q
Methods for converting accounts receivable to cash
A
- Collection agencies
- Factoring accounts receivable
- Cash discounts
- Electronic funds transfer
5
Q
Name the 3 motives for holding cash
A
- Transactions demand
- Precautionary demand
- Speculative demand
6
Q
Average gross receivables is calculated
A
average daily sales X average collection period
7
Q
Favorable credit terms is a response to
A
competitive forces or to increase cash flow
8
Q
Debt covenants protects
A
The lender
