BFIN 350 CHP 20 TEST QUESTIONS WITH ALL CORRECT ANSWERS
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BFIN 350 CHP 20
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BFIN 350 CHP 20
BFIN 350 CHP 20 TEST QUESTIONS WITH ALL CORRECT ANSWERS
If the net float is , the firms disbursment float exceeds its collection float and its available balance in bank exceeds its book balance. It is as the bank thinks the firm has more cash than it really does and this of course is desirable - ...
BFIN 350 CHP 20 TEST QUESTIONS
WITH ALL CORRECT ANSWERS
If the net float is , the firms disbursment float exceeds its collection float and its
available balance in bank exceeds its book balance. It is as the bank thinks the
firm has more cash than it really does and this of course is desirable - Answer-positive,
positive
If the bank balace is less than the book balance, the firm has a float - Answer-net
collection float
Why is a net collection float undesirable? - Answer-It is undesirable as the bank thinks
we have less money than we do
management involves controlling the collection and disbursment of cash - Answer-
float management
What is the objective of cash collection? - Answer-It is to speed up collections and
reduce the lag between the time customers purchase from the firm and the time the
money is collected
What is the objective of cash disbursment? - Answer-It is too control payments and
minimize the firm's costs associated with making payment
What are the 3 parts the float can be broken down into? - Answer-1) mail float 2)
processing float 3) availability float
The float is the part of collection and disbursment process where cheques are
trapped in the postal system - Answer-mail float
The float is the time it takes the receiver of a cheque to process the payment and
deposit it in a bank - Answer-processing float
The float refers to the time required to clear a cheque through the banking system
- Answer-availability float
The size of the float depends on what two factors? - Answer-1) the dollar value and 2)
time delay involved
What is the basic cost to the firm of the collection float? - Answer-It is simply the
opportunity cost from not being able to use the cash
What is the opportunity cost of the collection float? - Answer-It is simply the intrest the
firm could earn on that cash if it was available for investing
What is one of the goals of float management when it comes to collections? - Answer-It
is to try and reduce the collection delay
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