Mastering the Transaction Motive
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Questions and Answers

Which of the following best defines the transaction motive?

  • The need for cash to cover day-to-day business expenses like salaries, rent, and purchases (correct)
  • The need for cash to distribute dividends to shareholders
  • The need for cash to pay off debts
  • The need for cash to invest in long-term projects

    • What are some examples of cash outflows related to the transaction motive?

  • Payment of salary, rent, labor payment, and purchase of goods (correct)
  • Payment of dividends, interest, and taxes
  • Purchase of long-term assets and investments
  • Payment of debts and loans

    • What are some examples of cash inflows related to the transaction motive?

  • Cash received from investments and dividends
  • Cash received from borrowing loans
  • Cash received from selling long-term assets
  • Cash received from sale of goods and debtors (correct)

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