To identify if the policy is good or bad and cash management strategy violated or followed.

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Chapter 8, Problem 4E

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To identify if the policy is good or bad and cash management strategy violated or followed.

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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 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.

Exercise 6-4 (Algo) Cash management strategies LO C2 Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy. Cash payments and receipts are not planned. Instead, the company assumes it will have enough sales to not have to worry about cash shortages. Excess cash is used to acquire productive assets or short-term investments. All buildings are purchased, even those the company only plans to occupy for a few months. The company negotiates credit terms with suppliers to delay payment of liabilities as long as possible. Customers are regularly allowed to pay after due dates.