Reference no: EM132379679

Answer the following Questions:

QUESTION 1 : Creditors accounts are settled 35% in the month of purchase and 65% in the month following the purchase. If credit purchases are $20,000 in January and $26,000 in February how much cash is paid to creditors in February?

$20,000
$46,000
$23,900
$26,000
$22,100

QUESTION 2 : Which of these is not a strategy to improve cash inflow?

Offer incentives to debtors for prompt payments
Sell off unnecessary non-current assets
Increase expenditure on non-current assets
Increase sales
All are strategies to improve cash inflow

QUESTION 3 : If the opening balance of cash for one month is $20,000, cash receipts are estimated to be $389,000 and cash payments are estimated as $300,000 the opening cash balance at the beginning of the next month is:

$69,000
$109,000
$89,000
cannot be calculated

QUESTION 4 : In business it is desirable to build up cash balances as high as possible to cope with any emergency.

True
False