Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

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Multiple Choice

Which of the following is considered a good cash management practice when making inventory purchases?

Taking advantage of supplier discounts for early payment

Purchasing inventory in large quantities regardless of demand

Delaying payments to suppliers beyond agreed terms

Maintaining excessive inventory levels to avoid stockouts

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Verified step by step guidance

Understand the concept of cash management: Cash management involves efficiently handling a company's cash inflows and outflows to ensure liquidity and minimize costs. Good practices aim to optimize cash usage while maintaining strong supplier relationships.

Analyze the options provided: Evaluate each option to determine whether it aligns with good cash management practices. Consider factors such as cost savings, supplier relationships, and inventory efficiency.

Option 1: Taking advantage of supplier discounts for early payment. This is a good cash management practice because it reduces the cost of inventory purchases and strengthens supplier relationships by adhering to payment terms.

Option 2: Purchasing inventory in large quantities regardless of demand. This is not a good practice as it can lead to excessive inventory holding costs and cash being tied up in unsold goods, reducing liquidity.

Option 3 and 4: Delaying payments beyond agreed terms and maintaining excessive inventory levels. Both practices can harm supplier relationships and lead to inefficiencies, making them poor cash management strategies.