Cash management is a system that allows efficiency in receipt and payment, not cash. Its main aim is to encourage the collection of receivables, promote planned expenditure, keep only necessary assets, and encourage investment of excess cash. The adjustment entry to record depreciation on December 31.

Question

Want to see the full answer?

Answer 1

Question

Chapter 6, Problem 4E

To determine

Concept Introduction: Cash management is a system that allows efficiency in receipt and payment, not cash. Its main aim is to encourage the collection of receivables, promote planned expenditure, keep only necessary assets, and encourage investment of excess cash.

The adjustment entry to record depreciation on December 31.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy. 1. Bills are paid as soon as they are received. 2. Cash receipts and cash payments are regularly planned and reviewed. 3. Excess cash is put in checking accounts, earning no interest income. 4. Customers are regularly allowed to pay after due dates without concern. 5. Rarely used equipment is rented rather than purchased.

Determine whether each policy below is good or bad cash management, then identify the cash management strategy violated or followed for each policy. 1. The company negotiates credit terms with suppliers to delay payment of liabilities as long as possible 2. Excess cash is put in checking accounts, earning no interest income. 3. Cash receipts and cash payments are regularly planned and reviewed. 4. Customers are offered discounts to pay early. 5. All equipment is purchased, even equipment infrequently used. Good or Bad Cash Management Strategy

Determine whether each cash payment procedure is an internal control strength or weakness. 1. A voucher system is used for all payments of liabilities. 2. The owner of a small business has authority to write and sign checks. 3. When the owner is out of town, the recordkeeper is in charge of signing checks. 4. To save time, all departments are allowed to incur liabilities. 5. Payments over $100 are made by check. 6. Requesting and receiving merchandise are handled by the same department.