Chapter 14 - CASH: Lifeblood of the Business

overdraft

A negative balance in a depositor's bank account is referred as a(n) _____.

processing

Availability float and _____ float are the two primary causes of float.

cash equivalents

Debt investments that mature in less than three months are an example of _____.

customers

For a business to factor receivables, the _____ must have good credit ratings.

trade discounts

Percentage of concession in gross invoice amounts provided to encourage prompt payment are called _____.

charge back

Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major. Jane purchases a picture frame from Tammy using a credit card. She notices a crack in the frame and returns it to Tammy. Jane contacts the credit card service provider for a refund. The credit card company removes the sale amount from Tammy's account which is referred to as a(n) _____.

growth trap

Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major. Within a few months, the sales increase exponentially which results in a shortage of cash needed to expand their business. This crisis is termed _____.

profit

The amount that revenues exceed expenses is termed _____.

bank available balance

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

operating

The time required for a business to acquire resources, convert them into a product, sell the product, and receive cash from the sale is referred as the _____ cycle of a business.

Company book balance

Which of the following maintains a record of the inflows and outflows in a cash account?

Reconciling

Which of the following terms refers to the accounting process that identifies the causes of all differences between book and bank balances?

Commercial papers

_____ are notes issued by credit-worthy corporations.

Bank ledger balance

_____ is the name given to the bank's accounting system for all recognized transactions that affect the account, including deposits, electronic transfers, service fees, and checks presented to the bank for payment.

noncore project

Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who manages the budgets and expenses of the business. Within a few months, David notices problems in cash flow. Although not the primary strategy of her business, Tammy takes up craft projects for kindergarten schools in an effort to increase cash inflow. This kindergarten project is an example of a(n) _____.

delayed payments from customers.

According to the poll conducted by the National Federation of Independent Business (NFIB), small business faced cash flow problems because of:

noncore projects

Revenue-producing tasks and activities related to, but not part of, the primary strategy of a business, are called _____.

receivables

Susan, who is a florist, purchases her flowers on credit. Lucy, a customer, takes eight bouquets and promises to pay Susan within two weeks. The amount that Lucy owes Susan is termed _____.

Receivables

_____ refers to amounts that are owed to a business for merchandise that was sold on credit.

payables

Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major—who would manage the budgets and expenses of the business. Tammy buys her craft materials on credit from her supplier but clears all her debts at the end of every month. The amount that Tammy owes her supplier is referred to as _____.