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  • A Precautionary Motive For Holding Excess Cash Is

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    CJ alandy
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    A company holds excess cash for precautionary reasons, such as meeting emergencies that may arise periodically or enabling the company to take advantage of special inventory purchases before prices rise. The amount of cash a firm keeps on hand to avail itself of bargain purchases is referred to as its precautionary balance.

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    Accounting exercises

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    A Precautionary Motive for Holding Excess Cash Is

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    A company holds excess cash for precautionary reasons, such as meeting emergencies that may arise periodically or enabling the company to take advantage of special inventory purchases before prices rise. The amount of cash a firm keeps on hand to avail itself of bargain purchases is referred to as its precautionary balance.

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    911 views1 page

    A Precautionary Motive For Holding Excess Cash Is

    Uploaded by

    CJ alandy
    A company holds excess cash for precautionary reasons, such as meeting emergencies that may arise periodically or enabling the company to take advantage of special inventory purchases before prices rise. The amount of cash a firm keeps on hand to avail itself of bargain purchases is referred to as its precautionary balance.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    1.

    A precautionary motive for holding excess cash is:


    a. To enable a company to meet the cash demands from the normal flow of business
    activity
    b. To enable a company to avail itself of a special inventory purchase before prices rise to
    higher levels
    c. To enable a company to have cash to meet emergencies that may arise periodically
    d. To avoid having to use the various types of lending arrangements available to cover
    projected cash deficits
    2. The amount of cash that a firm keeps on hand in order to take advantage of any bargain
    purchases that may arise is referred to as its:
    a. Transactions balance c. Precautionary balance
    b. Compensating balance d. Speculative balance

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