Which one of the following statements is correct concerning a cash management system that employs both lockboxes and a concentration bank account?

Which one of the following statements is correct concerning a cash management system that employs both lockboxes and a concentration bank account?    A.  All customer payments must be submitted to a lockbox. B.  The party which collects the checks from the lockbox is responsible for recording the payment on the customer's account. C.  Payments received in a lockbox are transferred immediately to the concentration account. D.  The firm's cash manager determines how the funds in the concentration account are disbursed. E.  The concentration account must be zeroed out on a daily basis. Refer to section 19.3

27.

A zero-balance account:    A.  is used to cover the compensating balance requirement of a line of credit agreement. B.  is only used to deposit funds received at local lockboxes. C.  is funded on an as-needed basis only. D.  is limited to handling payroll disbursements. E.  requires a compensating balance. Refer to section 19.4

28.

Which one of the following statements is correct concerning zero-balance accounts?    A.  Each zero-balance account is offset by a compensating balance account. B.  Zero-balance accounts are used for depositing incoming funds. C.  A master account must be used in conjunction with a zero-balance account. D.  Zero-balance accounts are used solely in conjunction with a lockbox system. E.  Zero-balance accounts are still required to maintain a minimal balance. Refer to section 19.4

29.

Which one of the following statements is correct?    A.  The money market refers to securities that mature in two years or less. B.  Banks are prohibited from investing cash surpluses on behalf of their customers on a short- term basis. C.  Short-term securities tend to have a high degree of interest rate risk. D.  A cyclical firm may purchase marketable securities as part of its short-term financing plan. E.  Corporations are not permitted to invest in money market mutual funds but can invest in bank money market accounts. Refer to section 19.5

30.

Which two of the following are the primary reasons why firms temporarily accumulate large cash surpluses? I. cyclical activities II. desire to invest funds III. daily operations IV. fixed asset purchases    A.  I and III only B.  II and IV only C.  I and II only D.  III and IV only E.  I and IV only Refer to section 19.5