Online Business Accounting - Accounting Help 3?

Accounting Help 3?

Which of the following is NOT a basic principle of cash management? a. Increase collection of receivables b. Keep inventory levels high c. Advoid paying liabilities early d. Invest idle cash

Public Comments

(b) is incorrect. Inventory levels should be kept low!!!
b. Keeping inventory high requires cash outflow (i.e. you spend money to buy the goods) and it also indicates that you are not selling it to get cash from the sales of inventories.

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