A manufacturing firm has a 90-day collection period. The firm produces seasonal merchandise and thus has the least sales during the first quarter

A manufacturing firm has a 90-day collection period. The firm produces seasonal merchandise and thus has the least sales during the first quarter of a year and the highest level of sales during the fourth quarter of a year. The firm maintains a relatively steady level of production which means that its cash disbursements are fairly equal in all quarters. The firm is most apt to face a cash-out situation in:    A.  the first quarter. B.  the second quarter. C.  the third quarter. D.  the fourth quarter. E.  any quarter with equal probabilities of occurrence. Refer to section 18.4

49.

Jill is the CFO of Summertime Adventures which is a seasonal firm specializing in products related to water sports. The firm purchases inventory one month before it is sold and pays for its purchases 60 days after the invoice date. Sales are highest during July and August. Currently, Jill is preparing the cash disbursements section of the firm's cash budget. Which one of the following statements is supported by this information?    A.  Inventory purchases will be highest during the months of July and August. B.  Inventory purchases will be highest during the months of May and June. C.  Payments to suppliers will be highest during the months of June and July. D.  Payments to suppliers will be highest during the months of July and August. E.  Payments to suppliers will be highest during the months of August and September. Refer to section 18.4

50.

Which two of the following are most apt to cause a cash-out for a firm that is generally financially sound? I. fixed expenses II. fixed asset purchases III. flexible financing policy IV. highly seasonal sales    A.  I and III only B.  II and IV only C.  III and IV only D.  I, II, and III only E.  II, III, and IV only Refer to section 18.4

51.

Which one of the following statements is correct concerning the cash balance of a firm?    A.  Most firms attempt to maintain a zero cash balance at all times. B.  The cumulative cash surplus shown on a cash budget is equal to the ending cash balance plus the minimum desired cash balance. C.  On a cash balance report, the cumulative cash surplus at the end of May is used as June's beginning cash balance. D.  A cumulative cash deficit indicates a borrowing need. E.  The ending cash balance must equal the minimum desired cash balance. Refer to section 18.4