FIN 4200 EXAM 2 PRACTICE QUESTIONS
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,TB MC Qu. 19-17 a. Availability delay begins when a payment is deposited and ends when the cash from
that payment is available for spending.
Which one of the following collection times is correctly
described?
Multiple Choice
a. Availability delay begins when a payment is deposited and
ends when the cash from that payment is available for
spending.
b. Processing delay begins when a bill is mailed and ends
when the payment of that bill is deposited into the bank.
c. The processing delay starts when a bill is mailed and ends
when the payment is received.
d. Mailing time begins when a bill is mailed and ends when the
payment is received.
e. Collection time begins when a bill is mailed and ends when
the cash payment is available for spending.
TB MC Qu. 19-45 b. Target cash balance
A firm has analyzed the carrying and shortage costs
associated with its cash holdings and determined it should
ideally maintain a cash balance of $7,600. This $7,600
represents which one of the following?
Multiple Choice
a. Available balance
b. Target cash balance
c. Concentration balance
d. Selected cash amount
e. Compensating balance
,TB MC Qu. 19-70 d. 3.32 days
Currently, it requires two days to process the checks received Explanation
in the mail from your customers. The average mail time is 2.7 Collection time = .5(2.7) + 1 + .97
days and the check clearing time is .97 days. If you adopt a Collection time = 3.32 days
lockbox system, the mail time will be cut in half. In addition, if
employees are reassigned, checks could be processed in one
day. How long will your collection time be if both the lockbox
system and the job reassignments are implemented?
Multiple Choice
a. 3.25 days
b. 3.36 days
c. 3.63 days
d. 3.32 days
e. 3.29 days
TB MC Qu. 19-09 c. reduces float.
Which one of the following statements is true of financial
electronic data interchange (FEDI)? It:
Multiple Choice
a. eliminates the need for lockboxes.
b. was replaced by the Check Clearing Act for the 21st
Century.
c. reduces float.
d. eliminates zero-balance accounts.
e. electronically processes invoices but not fund transfers.
, TB MC Qu. 19-35 c. repurchase agreement.
A firm is buying a U.S. Treasury bill today with the
understanding that the seller will buy it back tomorrow at a
slightly higher price. This investment is known as a:
Multiple Choice
a. bill anticipation note.
b. private certificate of deposit.
c. repurchase agreement.
d. commercial paper transaction.
e. revenue anticipation note.
TB MC Qu. 19-47 c. $650
A firm's bank account has an available balance of $4,542 and a Explanation
check book balance of $4,813. There are uncollected deposits Disbursement float = $4,542 + 921 − 4,813
totaling $921. What is the amount of the disbursement float on Disbursement float = $650
this account?
Multiple Choice
a. $8,434
b. $750
c. $650
d. $1,192
e. $1,090
AND ANSWERS | FINANCE EXAM PREP |
STUDY GUIDE AND PRACTICE TEST
| GRADED A+ | GUARANTEED SUCCESS
Updated Questions and Answers
100% Verified Exam Prep
,TB MC Qu. 19-17 a. Availability delay begins when a payment is deposited and ends when the cash from
that payment is available for spending.
Which one of the following collection times is correctly
described?
Multiple Choice
a. Availability delay begins when a payment is deposited and
ends when the cash from that payment is available for
spending.
b. Processing delay begins when a bill is mailed and ends
when the payment of that bill is deposited into the bank.
c. The processing delay starts when a bill is mailed and ends
when the payment is received.
d. Mailing time begins when a bill is mailed and ends when the
payment is received.
e. Collection time begins when a bill is mailed and ends when
the cash payment is available for spending.
TB MC Qu. 19-45 b. Target cash balance
A firm has analyzed the carrying and shortage costs
associated with its cash holdings and determined it should
ideally maintain a cash balance of $7,600. This $7,600
represents which one of the following?
Multiple Choice
a. Available balance
b. Target cash balance
c. Concentration balance
d. Selected cash amount
e. Compensating balance
,TB MC Qu. 19-70 d. 3.32 days
Currently, it requires two days to process the checks received Explanation
in the mail from your customers. The average mail time is 2.7 Collection time = .5(2.7) + 1 + .97
days and the check clearing time is .97 days. If you adopt a Collection time = 3.32 days
lockbox system, the mail time will be cut in half. In addition, if
employees are reassigned, checks could be processed in one
day. How long will your collection time be if both the lockbox
system and the job reassignments are implemented?
Multiple Choice
a. 3.25 days
b. 3.36 days
c. 3.63 days
d. 3.32 days
e. 3.29 days
TB MC Qu. 19-09 c. reduces float.
Which one of the following statements is true of financial
electronic data interchange (FEDI)? It:
Multiple Choice
a. eliminates the need for lockboxes.
b. was replaced by the Check Clearing Act for the 21st
Century.
c. reduces float.
d. eliminates zero-balance accounts.
e. electronically processes invoices but not fund transfers.
, TB MC Qu. 19-35 c. repurchase agreement.
A firm is buying a U.S. Treasury bill today with the
understanding that the seller will buy it back tomorrow at a
slightly higher price. This investment is known as a:
Multiple Choice
a. bill anticipation note.
b. private certificate of deposit.
c. repurchase agreement.
d. commercial paper transaction.
e. revenue anticipation note.
TB MC Qu. 19-47 c. $650
A firm's bank account has an available balance of $4,542 and a Explanation
check book balance of $4,813. There are uncollected deposits Disbursement float = $4,542 + 921 − 4,813
totaling $921. What is the amount of the disbursement float on Disbursement float = $650
this account?
Multiple Choice
a. $8,434
b. $750
c. $650
d. $1,192
e. $1,090
