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Determine whether each policy below is good or bad cash management; then identify the cash management strategy violated or followed for each policy. Bills are paid as soon as they are received. Cash receipts and cash payments are regularly planned and reviewed. Excess cash is put in checking accounts, earning no interest income. Customers are regularly allowed to pay after due dates. Rarely used equipment is rented rather than purchased.

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Answer:

Consider the following explanation

Explanation:

1. Rarely used equipment is rented rather than purchased. Good. If the Fixed asset is rarely used, it should be rented. It would save money.

2. Cash receipts and cash payments are regularly planned and reviewed. Good. Cash planning helps to pay expenditures and minimizes borrowing costs

3. Bills are paid as soon as they are received. Bad. It reduces the Operating Cash Balances. It should pay bills when they are due .

4. Customers are offered discounts to pay early. Good. It would help to collect accounts receivable earlier .

5. Excess cash is put into short-term investments to earn extra income. Good. Idle cash is invested in Short-term investments to earn extra income and the liquidity.

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