CH20AQZV7 - Chapter 20 Quiz A Student Name _ _ 1. _ 2....

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Chapter 20 Quiz A Student Name _________________________ Student ID ____________ ________ 1. Your daily activities of collecting and disbursing funds are referred to as the _____ motive for holding cash. a. float b. transaction c. precautionary d. speculative ________ 2. A bank account which receives funds only as needed to cover the demands for payment is called a _____ account. a. float b. controlled disbursement c. master d. compensating balance ________ 3. Which one of the following will increase your disbursement float? a. issuing checks from a remote location b. installing a lockbox system for payments c. paying bills electronically d. collecting payments electronically ________ 4. Which one of the following statements is correct? a. Lockboxes are designed to eliminate disbursement float. b. Providing early payment discounts to customers increases your collection float. c. Cash concentration accounts increase the funds available for short-term investing. d. Money market accounts are relatively illiquid. ________ 5. Collection time includes each of the following EXCEPT the time it takes: a. the bank to make funds available once you deposit your customer’s checks. b. your staff to process and deposit checks. c. for your customers’ checks to reach your office once they are mailed. d. your staff to verify and pay invoices. ________ 6. When you reconciled your checkbook to the bank, you had outstanding deposits of $11,219 and outstanding checks of $14,708. Your adjusted check book balance is $5,239. What is the amount of the collection float? a. $3,489 b. $9,469 c. $11,219 d. $14,708 ________ 7. Your firm receives the following checks each month. The average amount of each check and the average collection delay are as shown below. What is the weighted average delay assuming that each month has 30 days? Customer Check Amount Collection Delay A $31,000 3 days B $48,000 5 days C $91,000 2 days a. 3.03 days b. 3.16 days c. 3.33 days d. 3.72 days ________ 8. Your firm receives an average of 620 checks each day with an average amount of $49 per check. These checks clear the bank on average in 2.5 days. The applicable daily interest rate is .02 percent. What is the present value of the float assuming that each month has 30 days? a. $72,912 b. $73,912 c. $74,408 d. $75,950 ________ 9. Whitney Enterprises receives an average of 630 checks each day with an average value of $99 per check. If the firm installs a lockbox system they can reduce their average collection time by 2 days. The daily interest rate on Treasury bills is .009 percent. The cost of the lockbox system is $.24 per check. What is the amount of the expected daily savings from the lockbox system? a. $10.94
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This note was uploaded on 05/29/2010 for the course FIN 325 taught by Professor Staff during the Spring '08 term at San Diego State.

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CH20AQZV7 - Chapter 20 Quiz A Student Name _ _ 1. _ 2....

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