Question 1

One highly effective cash management strategy is to schedule inventory deliveries as early as possible to speed your payment of accounts payable.

Accepted Answer

A) True 
 B)False

Question 2

The lack of cash has driven a number of small businesses,even those with solid profits,into bankruptcy.

Accepted Answer

A) True 
 B)False

Question 3

Proper management of cash accounts can yield the owner additional leverage,the equivalent to actually keeping the capital in the accounts.

Accepted Answer

A) True 
 B)False

Question 4

The cash management role of "cash conserver," controlling the cash needed to pay bills,and prioritizing and timing those payments,is the entrepreneur's first and foremost responsibility.

Accepted Answer

A) True 
 B)False

Question 5

Entrepreneurs can trim costs by:

Accepted Answer

A) avoiding nonessential outlay. 
B) looking for simple ways to cut costs. 
C) establishing an internal security and control system. 
D) All of the above 
A) avoiding nonessential outlay. 
B) looking for simple ways to cut costs. 
C) establishing an internal security and control system. 
D) All of the above

Question 6

Once a small business has established a firm written credit policy and communicated it,the next step in building an effective credit policy is to:

Accepted Answer

A) send invoices promptly. 
B) determine what percentage of sales is being written off as bad debt. 
C) create a simple credit application. 
D) create a "tracking file" of events. 
A) send invoices promptly. 
B) determine what percentage of sales is being written off as bad debt. 
C) create a simple credit application. 
D) create a "tracking file" of events.

Question 7

In a cash budget,credit sales to customers are recorded as soon as the sale is made.

Accepted Answer

A) True 
 B)False

Question 8

The "big three" of cash management include:

Accepted Answer

A) accounts receivable,overhead,and inventory. 
B) accounts payable,accounts receivable,and taxes. 
C) accounts receivable,accounts payable,and inventory. 
D) accounts receivable,prices,and expenses. 
A) accounts receivable,overhead,and inventory. 
B) accounts payable,accounts receivable,and taxes. 
C) accounts receivable,accounts payable,and inventory. 
D) accounts receivable,prices,and expenses.

Question 9

The budgeting strategy that evaluates the necessity of every item on the budget each year by starting with a zero in each budget category is called:

Accepted Answer

A) accrual budgeting. 
B) cash budgeting. 
C) zero-based budgeting. 
D) cash flow budgeting. 
A) accrual budgeting. 
B) cash budgeting. 
C) zero-based budgeting. 
D) cash flow budgeting.

Question 10

For cash planning purposes,it is better to underestimate cash disbursements than to overestimate them.

Accepted Answer

A) True 
 B)False

Question 11

There are four steps to creating a cash budget: Determining an adequate minimum cash balance;Forecasting sales;Forecasting cash receipts;and Estimating the end-of-month cash balance.

Accepted Answer

A) True 
 B)False

Question 12

When it comes to debt collection,it is appropriate to seek to motivate the customer to pay and not get into why the bill hasn't been paid during the "discussion stage" of the collection process.

Accepted Answer

A) True 
 B)False

Question 13

The statement,"collection of accounts receivable lags behind sales," means that:

Accepted Answer

A) the collection of funds in the accounts receivable is always late. 
B) customers always are late in paying their bills. 
C) the customers who purchased goods on credit may not pay until a month or more later. 
D) None of the above 
A) the collection of funds in the accounts receivable is always late. 
B) customers always are late in paying their bills. 
C) the customers who purchased goods on credit may not pay until a month or more later. 
D) None of the above

Question 14

A lockbox arrangement is very inexpensive to operate and is economical even for small businesses with a low volume of payments on account.

Accepted Answer

A) True 
 B)False

Question 15

The most important item on the balance sheet is:

Accepted Answer

A) cash. 
B) disbursements. 
C) expenses. 
D) receivables. 
A) cash. 
B) disbursements. 
C) expenses. 
D) receivables.

Question 16

One effective technique for improving cash management is to establish a firm credit policy in writing and let customers know in advance what it is.

Accepted Answer

A) True 
 B)False

Question 17

When creating the cash budget,keep in mind that:

Accepted Answer

A) it should be a monthly plan,projected out for 3 years. 
B) the more variable the sales pattern,the shorter the planning horizon should be. 
C) it should be quarterly estimates for a period of 1 year. 
D) it is a verbal or mental "document" in order to permit maximum flexibility. 
A) it should be a monthly plan,projected out for 3 years. 
B) the more variable the sales pattern,the shorter the planning horizon should be. 
C) it should be quarterly estimates for a period of 1 year. 
D) it is a verbal or mental "document" in order to permit maximum flexibility.

Question 18

The longer a debt is outstanding,the lower its probability of collection.

Accepted Answer

A) True 
 B)False

Question 19

What role does barter play in improving a small firm's cash flow?

Accepted Answer

Bartering,the exchange of good

Question 20

When forecasting cash disbursements in the cash budget:

Accepted Answer

A) they count as a cash receipt until they are paid. 
B) they should be recorded in the month they will be paid. 
C) the disbursement should be recorded in the month the obligation was incurred. 
D) the money can be used for other purposes until it is due for disbursement. 
A) they count as a cash receipt until they are paid. 
B) they should be recorded in the month they will be paid. 
C) the disbursement should be recorded in the month the obligation was incurred. 
D) the money can be used for other purposes until it is due for disbursement.

Exam 15: Managing Cash Flow

One highly effective cash management strategy is to schedule inventory deliveries as early as possible to speed your payment of accounts payable.

The lack of cash has driven a number of small businesses,even those with solid profits,into bankruptcy.

Proper management of cash accounts can yield the owner additional leverage,the equivalent to actually keeping the capital in the accounts.

The cash management role of "cash conserver," controlling the cash needed to pay bills,and prioritizing and timing those payments,is the entrepreneur's first and foremost responsibility.

Entrepreneurs can trim costs by:

Once a small business has established a firm written credit policy and communicated it,the next step in building an effective credit policy is to:

In a cash budget,credit sales to customers are recorded as soon as the sale is made.

The "big three" of cash management include:

The budgeting strategy that evaluates the necessity of every item on the budget each year by starting with a zero in each budget category is called:

For cash planning purposes,it is better to underestimate cash disbursements than to overestimate them.

There are four steps to creating a cash budget: Determining an adequate minimum cash balance;Forecasting sales;Forecasting cash receipts;and Estimating the end-of-month cash balance.

When it comes to debt collection,it is appropriate to seek to motivate the customer to pay and not get into why the bill hasn't been paid during the "discussion stage" of the collection process.

The statement,"collection of accounts receivable lags behind sales," means that:

A lockbox arrangement is very inexpensive to operate and is economical even for small businesses with a low volume of payments on account.

The most important item on the balance sheet is:

One effective technique for improving cash management is to establish a firm credit policy in writing and let customers know in advance what it is.

When creating the cash budget,keep in mind that:

The longer a debt is outstanding,the lower its probability of collection.

What role does barter play in improving a small firm's cash flow?

When forecasting cash disbursements in the cash budget:

Entrepreneurs: the Driving Force Behind Small Business

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

New Business Planning Process: Feasibility Analysis,business Modeling,

Building a Bootstrap Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Creating a Solid Financial Plan

Sources of Equity Financing

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

The Legal Environment: Business Law and Government Regulation

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