CBS Cash Flow Management 3

Question 1

Which of the following best describes a zero-balance account (ZBA) in cash management?

Accepted Answer

A subsidiary account automatically funded from a master account as checks clear

Answer

A ZBA is a disbursement account that maintains a zero balance until checks clear, at which point funds are transferred automatically from a master account.

Question 2

Lockbox services improve cash flow primarily by:

Accepted Answer

Reducing mail and processing float

Answer

Lockboxes intercept customer payments at a bank's regional post office boxes, reducing the time between mailing and deposit.

Question 3

A company has days payable outstanding (DPO) of 30 days. Extending DPO to 45 days would:

Accepted Answer

Shorten the cash conversion cycle by 15 days

Answer

CCC = DIO + DSO − DPO; increasing DPO by 15 days reduces the CCC by 15 days, freeing cash.

Question 4

In a cash budget, beginning cash plus cash receipts minus cash disbursements equals:

Accepted Answer

Ending cash before financing

Answer

This calculation yields the ending cash balance before any short-term borrowing or repayment decisions are made.

Question 5

Which short-term investment is most appropriate for temporarily excess cash that may be needed within 30 days?

Accepted Answer

Treasury bills

Answer

Treasury bills are highly liquid, low-risk, short-duration instruments suitable for parking cash needed in the near term.

(CBS) Certified Budget Specialist Practice Test

(CBS) Certified Budget Specialist Practice Test

CBS Cash Flow Management 3