Cash Management Fundamentals Flashcards
7 cards from real CCM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Cash Management Fundamentals flashcards as text
A zero-balance account (ZBA) structure requires a master concentration account to:
Answer: Fund ZBA sub-accounts only when checks are presented for payment
In a ZBA structure, the master account automatically funds each sub-account for exactly the amount of checks presented that day, keeping sub-account balances at zero.
Which cash forecasting technique uses historical patterns of receipts and disbursements to project future cash flows?
Answer: Scheduling (receipts and disbursements) method
The scheduling (receipts and disbursements) method tracks each expected inflow and outflow by specific date, making it the most granular and commonly used short-term cash forecasting approach.
The Miller-Orr cash management model sets an upper control limit at:
Answer: Three times the return point above the lower limit
In the Miller-Orr model, the upper control limit = lower limit + 3 × (return point − lower limit), meaning it is set at three spread-widths above the lower limit.
ACH credit transactions initiated by a company to pay employees' salaries are classified under which Standard Entry Class (SEC) code?
Answer: PPD
PPD (Prearranged Payment and Deposit) is the ACH SEC code used for consumer direct deposit of payroll and other recurring credits to personal accounts.
A company wants to reduce banking fees while maintaining necessary services. Which analysis tool compares actual bank charges to standard tariffs?
Answer: Bank account analysis statement
A bank account analysis statement itemizes each service used and the corresponding charge, allowing the treasury team to identify overcharges and negotiate fee reductions.
Which of the following is an advantage of using an in-house bank (IHB) structure for a multinational corporation?
Answer: Centralizes liquidity and reduces external borrowing by pooling intercompany balances
An in-house bank acts as an internal intermediary, netting intercompany exposures and concentrating surplus cash so subsidiaries borrow internally rather than from external banks.
The earnings credit rate (ECR) on a bank account analysis statement is used to:
Answer: Offset bank service charges with a credit derived from average collected balances
The ECR converts a company's average investable (collected) balance into an earnings credit that reduces or offsets monthly bank service charges.