1. In computer-based accounting information systems, the general ledger is no longer required and is, to all intent and purposes, redundant.’ Discuss.
2. ‘Despite the rhetoric to the contrary, the internet-based “virtual shop” will never replace the traditional high street retail outlet.’ Discuss.
Kiley plc is a UK-based retailer. The company regularly invests surplus funds in seven-day notice short-term deposits on the UK money market. Currently, such short-term deposits pay an interest of 5% per annum. Also currently, Kiley plc has cash payments for each month totalling £1,250,000, per month (or £15m pa). Assume transactions costs are £15.40 per transaction.
Using the Baumol cash management model calculate how much Kiley plc should transfer to its bank account and briefly explain the main assumptions that are made when using the Baumol cash management model.
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