Question

Which of the following is not a basic principle of cash management?

Increase the speed of collection on receivables.

Maintain idle cash.

Keep inventory levels low.

Delay payment of liabilities.

Answer 1

Definition:

Cash management is the effective assortment, payment, and speculation of money in an association while keeping up the organization's liquidity. As such, it is the manner by which a specific association deals with its money related tasks, for example, putting cash in various transient ventures, assortment of incomes, installment of costs, and liabilities while guaranteeing it has adequate cash accessible for sometime later.

Basic Principles of Cash management:

1. Speed up collection of Receivables

2. Keep Inventory levels low

3. Delay payment of Liabilities

4. Invest Ideal Cash

5. Prepare Cash Budget.

Not a basic principle of cash management?

• maintain idle cash -
• is not the basic principle of cash management.
• so here, option 2 is the correct answer

therefore, maintain idle cash is not a basic principle of cash management.

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