MGMT: NBV Test 4

money

- a medium of exchange accepted by the community or what people buy things with and sell things for. -provides a standard for measuring value, so that the worth of different goods and services can be compared. -a store of value that can be saved for later purchases.

company book balance

-the sum of cash inflows and outflows recorded in the firm's accounting records -usually called the cash account

Sources of Cash Flow

1. Cash can be obtained by sellings the products and services of the business and collecting cash from customers...cash flow from operations. 2. Cash can be obtained from investments the business has made, such as stocks, bonds, land, buildings, or equipment...called cash flow from investing. 3. A business may obtain cash through financing.

Purposes of Money

1. To make exchanges 2. To keep track of wealth or value.

growth trap

a financial crisis that is caused by a business growing faster than it can be financed.

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.

charge back

a reduction in the bank account of a merchant by a credit card company.

cash disbursements budget

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

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.

payables

amounts owed to vendors for merch or services PURCHASED on credit

receivables

amounts that are owed to a business for merch that was SOLD on credit.

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.

cash equivalents

assets that may be quickly converted to cash.

factoring receivables

borrowing money secured by a firm's accounts receivable.

deposits and progress payments

cash payments received before product is completed or delivered.

float

delays in the movement of money among depositors and banks.

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.

demand deposits

money held in checking and savings accounts.

Cash

money that is immediately available to be spent.

commercial paper

notes issued by credit-worthy corporations.

trade discounts

percentage discounts from gross invoice amounts provided to encourage prompt payment.

consignment

practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold.

barter

practice of trading goods and services without the use of money.

discounts for prompt payment

reduction in sales price provided to credit customers for paying outstanding amounts in a timely manner.

non-core projects

revenue-producing tasks and activities related to, but not part of, the primary strategy of a business.

non-cash incentives

rewards that do not require payment of cash, such as stock options, compensating time off, or added vacation days.

marketable securities

stocks and bonds that are traded on an open market.

bank ledger balance

sum of deposits and withdrawals recorded in a bank's accounting records.

bank available balance

sum of money that has actually been received and paid out of a depositor's account.

currency

the bills and coins printed by governments to represent money.

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.