For the following two situations, select the statement that would be most helpful in managing cash in each situation which is consistent with effective cash management techniques. Situation 1: Sales of our products generated extra cash that is not needed until later in the year. Situation 2: A few of our suppliers are unhappy because some checks we issued have been returned marked NSF. We feel that we have enough money in the bank account. StatementSituation 1Situation 2Increase the speed of collection on receivables by offering a sales discount 1/10 or 2/10, net 30. Offer customers shorter credit terms, e.g., 30 instead of 45 days. Sell receivables to a factor. Keep inventory quantities down to a level that is adequate for meeting current orders. Delay payment of liabilities by negotiating longer credit terms from suppliers, e.g., 40 instead of 30 days. Plan the timing of major expenditures. Invest in idle cash. Balance the Cash account daily after recording all cash transactions, including electronic fund transfers (EFT), and a monthly bank reconciliation statement. Check customers' credit history and references thoroughly before extending credi
For the following two situations, select the statement that would be most helpful in managing cash in each situation which is consistent with effective cash management techniques.
Situation 1: Sales of our products generated extra cash that is not needed until later in the year.
Situation 2: A few of our suppliers are unhappy because some checks we issued have been returned marked NSF. We feel that we have enough money in the bank account.
StatementSituation 1Situation 2Increase the speed of collection on receivables by offering a sales discount 1/10 or 2/10, net 30.
Offer customers shorter credit terms, e.g., 30 instead of 45 days.
Sell receivables to a factor.
Keep inventory quantities down to a level that is adequate for meeting current orders.
Delay payment of liabilities by negotiating longer credit terms from suppliers, e.g., 40 instead of 30 days.
Plan the timing of major expenditures.
Invest in idle cash.
Balance the Cash account daily after recording all cash transactions, including electronic fund transfers (EFT), and a monthly
Check customers' credit history and references thoroughly before extending credit.
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