Accounting Multiple Choice Question – 30 January 2025

There are a number of motives that influence how much a business wishes to hold in cash.

When a company holds cash in order to make the payments that are necessary to keep the business going, such as wages, taxes and payments to suppliers, the motive behind this is?

Select ONE answer:

1. The transactions motive
2. The finance motive
3. The precautionary motive
4. The speculative motive

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > The transactions motive means that a business holds cash to meet its current day-to-day financial obligations.
2. Not correct
3. Not correct
4. Not correct

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