Chapter 13: Cash: Lifeblood of the Business (BOOK)
Timing Purchases
A method of controlling the timing of cash outflows that is invisible to suppliers and vendors.
Overdraft
A negative balance in a depositor's bank account.
Discounts for Prompt Payment
A reduction in sales price provided to credit customers for paying outstanding amounts in a timely manner.
Charge Back
A reduction in the bank account of a merchant by a credit card company.
Cash Disbursements Budgets
A schedule of the amounts and timings of payments of cash out of a business.
Cash Receipts Budget
A schedule of the amounts and timings of the receipt of cash into a business.
Nonsufficient Funds (NSF)
A situation that occurs when a check is returned to a depositor because the writer of the check did not have a bank available balance equal to or greater than the amount of the check.
Comprehensive Budget
Also often referred to as master budgets, are sets of budgets that detail all projected receipts and spending for the budget period.
Payables
Amounts owed to vendors for merchandise or services purchased on credit.
Receivables
Amounts that are owed to a business for merchandise that was sold on credit.
Money
An accepted medium of exchange.
Reconciling
An accounting process that identifies the causes of all differences between book and bank balances.
Clearinghouse
An entity that processes checks and electronic fund transfers for banks and other financial organizations.
Short-Term Debt
Any debt that must be paid in less than one year from the date of the financial statement on which it is reported.
Bearer
Any person or business entity who possesses a security.
Factoring Receivables
Borrowing money secured by a firm's accounts receivable.
Demand Deposits
Money held in checking and savings accounts.
Cash
Money that is immediately available to be spent.
Commercial Paper
Notes issued by creditworthy corporations.
Operating Cycle
See cash-to-cash cycle.
Cash Equivalents
Assets that may be quickly converted to cash.
Deposits and Progress Payments
Cash payments received before product is completed or delivered.
Trade Discounts
Percentage discounts from gross invoice amounts provided to encourage prompt payment.
Cash Flow Management
Planning and tracking the amounts and timing of money to be received and paid during the business cycle.
Marketable Securities
Stocks and bonds that are traded on an open market.
Currency
The bills and coins printed by governments to represent money.
Noncore Projects
Revenue-producing tasks and activities, related to, but no part of, the primary strategy of a business.
Noncash Incentives
Rewards that do not require payment of cash, such as stock options, compensating time off, or added vacation days.
Consignment
The practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold.
Barter
The practice of trading goods and services without the use of money.
Company Book Balance
The sum of cash inflows and cash outflows recorded in the firm's accounting records.
Bank Ledger Balance
The sum of deposits and withdrawals recorded in a bank's accounting records.
Bank Available Balance
The sum of money that has actually been received and paid out of a depositor's account.
Cash Budget
Identifies when, how, and why cash is expected to come into the business, and when, how, and why it is expected to leave.
Cash-to-Cash Cycle
The time that is required for a business to acquire resources, convert them into product, sell the product, and receive cash from the sale.
Gaming the Payment Process
Using methods to appear to be paying bills on time, when in fact payment is being delayed or avoided.