Explanation: One disadvantage of using cash is the risk of loss or theft. If a person carries a significant amount of cash with them, it can be easily lost or stolen, leading to financial loss.
Final answer: Using cash for purchases has the disadvantage of relying solely on a paper receipt as proof of payment, which can be problematic if the receipt is lost. Explanation: The disadvantage of using cash for purchases is that your paper receipt may be the only record of your payment.
Risk of using cash: One risk of using cash is not having fraud protection. When making purchases with cash, if the money is lost or stolen, there is no way to recover it, unlike with credit cards where there are protections against fraudulent transactions.
The downside is that it doesn't match revenue with expenses and can provide a distorted view of the overall financial health of the business. It provides an overview of cash received and cash paid during the period although cash is earned and expenses are incurred.
These include security risks, the lack of traceability, inconvenience for large transactions, and limitations for international transactions. As cash management technology continues to advance, the drawbacks associated with physical cash become less pronounced.
Cons: Less Secure. Cash is less secure than a credit card. Unlike credit cards, if you lose physical money or have it stolen, there's no way to recover your losses.
Cash payments pose risks such as theft and loss, as physical currency can be easily stolen or misplaced. Additionally, there's a higher likelihood of human error in counting and handling cash, leading to discrepancies in financial records.
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Our financial literacy programs are designed to equip students with the knowledge and skills necessary to make informed and effective decisions with their financial resources. They introduce students to key concepts such as budgeting, saving, investing, understanding credit, and planning for the future.
disadvantages of using cash. cash has to be counted, has to be locked away for security, and it can be stolen.
A great disadvantage of money is that its value does not remain constant which creates instability in the economy. Too much of money reduces its value and causes inflation (i.e., rise in price level) and too little of money raises its value and results in deflation (i.e., fall in price level).
As a cash flow statement is based on the cash basis of accounting, it ignores the basic accounting concept of accrual. Cash flow statements are not suitable for judging the profitability of a firm, as non-cash charges are ignored while calculating cash flows from operating activities.
Drawbacks of Cash Payments. While paying employees with cash can offer certain conveniences, it also presents significant challenges. These include difficulties in maintaining accurate records, ensuring tax compliance, and mitigating security risks associated with cash transactions.
For some, carrying around cash is a temptation. If you're holding too much cash, you may be enticed to spend it on things that you don't need. Cash can also be lost or stolen, and it's usually not replaceable once this happens.
Low yields. Cash typically offers lower returns compared to other investment options, and inflation may erode its purchasing power over time. Tax implications. Dividends earned from cash holdings are taxable, potentially reducing the net returns on your investment.
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Manage emergencies and unexpected expenses
Paying with cash helps you avoid these headaches and get your business back up and running fast. You can access the funds you need immediately, purchase necessary parts, and reduce the risk of protracted disruptions to your operations.
Internal control review towards the revenue cycle is required to evaluate the effectiveness and efficiency of the existing management in order to support the achievement of company goals, and provide recommendations to allow corrective actions.
How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.)
1. CARRYING CASH MAKES YOU A TARGET FOR THIEVES. If you're fully committed to the cash envelope system, one of the disadvantages of using cash means you'll always be toting around cash—and sometimes a lot of it, especially after payday. And while you might not walk around wearing a sign that says “Thieves, over here!