Chp14 - Entre - TB

Which of the following maintains a record of the inflows and outflows in a cash account? A. Overdraft balance B. Bank available balance C. Bank ledger balance D. Company book balance

D. Company book balance

An entity that processes checks and electronic fund transfers for banks and other financial organizations is called a _____.

A. clearinghouse

_____ 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. A. Bank ledger balance B. Company book balance C. Overdraft balance D. Bank available balance

A. Bank ledger balance

_____ is the practice of trading goods and services without the use of money. A. Barter B. Consignment C. Noncash incentive D. Float

A. Barter

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 _____. A. payables B. charge backs C. deposits D. receivables

A. payables

Cash that can be obtained from stocks, bonds, land, buildings, or equipment that a business has is called: A. cash flow from operations. B. cash from financing. C. cash flow from subsidy. D. cash flow from investing.

D. cash flow from investing.

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

B. Receivables

The two forms of short-term financing are short-term debt and _____. A. bonds B. commercial paper C. marketable security D. demand deposit

B. commercial paper

Percentage of concession in gross invoice amounts provided to encourage prompt payment are called _____. A. receivables B. noncash incentives C. trade discounts D. charge backs

C. trade discounts

For a business to factor receivables, the _____ must have good credit ratings. A. suppliers B. business C. vendors D. customers

D. customers

A _____ is a form of money that can be immediately used to make payments. A. debt investment B. marketable security C. commercial paper D. traveler's check

D. traveler's check

_____ are notes issued by credit-worthy corporations. A. Commercial papers B. Receivables C. Demand deposits D. Marketable securities

A. Commercial papers

_____ is a method of borrowing against receivables. A. Factoring B. Trading C. Discounting D. Reconciling

A. Factoring

A(n) _____ refers to the sum of cash inflows and cash outflows recorded in a firm's accounting records. A. company book balance B. bank ledger balance C. overdraft balance D. bank available balance

A. company book balance

Josh, the owner of a software company, is facing cash flow problems. To control the cash outflow, he avoids paying the bills to his vendors. After much delay, he sends a check in payment but intentionally forgets to sign the check. To prevent the cash from going out of his business, Josh is applying the strategy of _____. A. gaming the payment process B. timing the purchases C. noncash incentives D. trade discount payments

A. gaming the payment process

A delay in delivering checks from the writer of a check to the recipient's bank is called _____. A. processing float B. overdraft C. availability float D. charge back

A. processing float

Money that is immediately available to be spent is called _____.

B. cash

Which of the following is an example of a cash equivalent? A. Currency B. Commercial paper C. Demand deposit D. Traveler's check

B. Commercial paper

A negative balance in a depositor's bank account is referred as a(n) _____. A. availability float B. overdraft C. ledger balance D. charge back

B. overdraft

The information that the bank knows about an account, but is not known by the account holder, includes: A. the checks written and mailed by an account holder but have not been received by the bank. B. the amount of any direct payments made in the account by the account holder's customers. C. deposits that the account holder has mailed or made after bank closing. D. the sum of cash inflows and cash outflows recorded in the holder's accounting records.

B. the amount of any direct payments made in the account by the account holder's customers.

A _____ budget is also referred to as a master budget.

C. comprehensive

Checking and savings accounts are the most common forms of _____. A. commercial papers B. marketable securities C. demand deposits D. debt investments

C. demand deposits

In a business, accepting payments by credit card causes significant differences between the bank and book balances because the credit card service provider: A. records the gross amount of each credit card sale. B. deposits the amount of the sale in the business's account on the date of the sale itself. C. deposits the sale amount in the business's account after deducting a service fee. D. retains the sale amount in the business's account in the event of customer challenge.

C. deposits the sale amount in the business's account after deducting a service fee.

The amount that revenues exceed expenses is termed _____. A. interest B. credit C. profit D. overhead

C. profit

Which of the following strategies is used by a business to decrease cash outflows?

D. Avoiding the wastage of resources

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

D. cash equivalents

_____ is a method that employees use to steal cash after it has been received and recorded in the company books. A. Racketeering B. Phony disbursement C. Skimming D. Embezzlement

D. Embezzlement

Which of the following terms refers to the accounting process that identifies the causes of all differences between book and bank balances? A. Clearing house B. Float C. Charge back D. Reconciling

D. Reconciling

Amounts owed to vendors for merchandise or services purchased on credit are called _____. A. receivables B. deposits C. charge backs D. payables

D. payables

A _____ must be paid in less than one year from the date of the financial statement on which it is reported but can be sold to other investors at any time. A. commercial paper B. demand deposit C. marketable security D. short-term debt

D. short-term debt

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. David prepares the quarterly budget and maintains a company book for recording all transactions. The company book balance that David regularly updates is the sum of:

D. the cash inflows and cash outflows recorded in the firm's accounting records.

Currency is a form of cash represented by: A. stocks and bonds. B. bills and coins. C. commercial paper. D. demand deposits.

B. bills and coins.

The information that the account holder knows about his or her account, but the bank does not know, includes:

C. any deposits the holder has made after bank closing.

Using methods to appear to be paying bills on time, when in fact the cash outflow is being delayed or avoided is called _____.

C. gaming the payment process

Which of the following is a strategy to handle cash shortfalls in small businesses? A. Purchasing investments B. Increasing payables C. Borrowing money D. Retaining employees

C. Borrowing money

_____ make up most of the noncurrency cash which is available immediately. A. Marketable securities B. Debt investments C. Commercial papers D. Demand deposits

D. Demand deposits

A(n)_____ identifies when, how, and why money is expected to come into the business, and when, how, and why it is expected to leave. A. bearer B. overdraft C. charge back D. cash budget

D. cash budget

A crisis in which there is a shortage of cash for expanding a business after an exponential increase in sales is termed _____. A. nonsufficient funds B. reconciling C. charge back D. growth trap

D. growth trap

Availability float and _____ float are the two primary causes of float. A. bank ledger B. reconciling C. charge back D. processing

D. processing

Which of the following is the most common noncash incentive given to an employee? A. Stock options B. Autonomy C. Benefits packages D. Telecommuting

A. Stock options

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 _____. A. receivables B. deposits C. charge backs D. payables

A. receivables

A reduction in the bank account of a merchant by a credit card company is termed _____

B. charge back

_____ is a schedule of the amounts and timings of the cash coming into a business. A. Cash disbursements budget B. Cash receipts budget C. Comprehensive budget D. Capital budget

B. Cash receipts budget

Delays in the movement of money among depositors and banks is referred to as a(n) _____. A. overdraft B. ledger balance C. float D. charge back

C. float

According to the definition provided by the U.S. Dallas Federal Reserve Bank, which of the following is one of the primary purposes of money? A. Creating competition B. Maximizing the wealth of all citizens equally C. Creating cash flow statements D. Making exchanges

D. Making exchanges

Mr. Hill, who runs a key-chain manufacturing unit, buys raw materials from his supplier during the first week of every month. The supplier's policy states that all payments need to be cleared within 50 days of buying the materials. This schedule ensures that Mr. Hill gets an extended period to make payments thus controlling when the payment is made. Which of the following strategies is Mr. Hill using to control cash outflow? A. Taking a consignment B. Offering trade discount C. Gaming the payment process D. Timing the purchase

D. Timing the purchase

According to the poll conducted by the National Federation of Independent Business (NFIB), small business faced cash flow problems because of: A. delayed payments from customers. B. lack of seasonal fluctuation in sales. C. delayed payments from vendors. D. unexpected increases in taxes.

A. delayed payments from customers.

_____ represent either ownership or debt of publicly held firms and government issued debt, in the form of bonds, notes, and bills. A. Demand deposits B. Marketable securities C. Set-asides D. Traveler's checks

B. Marketable securities

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) _____. A. incentive B. liquidity C. overdraft D. charge back

D. charge back

Cash payments received before a product is completed or delivered are called _____. A. overdrafts B. discounted payments C. payables D. deposits and progress payments

D. deposits and progress payments

_____ refers to the practice of accepting goods for resale, without taking ownership of them and without being responsible to pay prior to their being sold. A. Barter B. Consignment C. Noncash incentive D. Benchmarking

B. Consignment

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. A. seasonal B. operating C. credit D. chargeback

B. operating

A(n) _____ is a delay in transferring money among banks due to internal procedures. A. overdraft B. availability float C. charge back D. processing float

B. availability float

The most common strategy employed by small businesses for handling money shortages is _____. A. adjusting scheduled payments B. using personal money C. selling investments D. laying off employees

B. using personal money

Revenue-producing tasks and activities related to, but not part of, the primary strategy of a business, are called _____. A. discount projects B. charge backs C. noncore projects D. consignments

C. noncore projects

Which of the following steps helps to protect cash from being stolen by employees? A. Running periodic credit checks on employees who have access to a business's finances B. Having internal and external audits and ignoring any variances in the budget C. Assigning only one person to authorize bill payments and to write the checks for payments D. Hiring an employee to examine every aspect of cash inflows of a business

A. Running periodic credit checks on employees who have access to a business's finances

Training and flexible hours are a part of the _____ strategy used to control money that is expected to leave the firm. A. noncash incentive B. trade discount C. barter system D. gaming payment

A. noncash incentive

Every month, David, an assistant at a shoe store, steals money from his employer, after it has been received and recorded in the books, by altering the accounting records in the company book. David's act falls under which of the following categories of theft? A. Shoplifting B. Embezzlement C. Skimming D. Phony disbursement

B. Embezzlement

A jewelry store promises to deliver custom-made wedding rings to a buyer within 2 weeks. However, it charges ten percent of the sales price in advance. In this example, which of the following techniques is the store using to increase cash inflows? A. It is offering discounts to customers for prompt payment. B. It is taking deposits and progress payments. C. It is factoring all receivables. D. It is taking on noncore paying projects.

B. It is taking deposits and progress payments.

_____ refers to 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. A. Charge back B. Nonsufficient fund C. Reconciling D. Overdraft

B. Nonsufficient fund

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. Tammy receives a bulk order from a customer to make 100 paper roses for Valentine's Day. She charges 20 percent of the total sales price in advance and promises to deliver the order within 30 days. The advance payment that Tammy receives for the order before delivering the product is called _____. A. discount payment B. deposit and progress payment C. noncash incentive D. gaming the payment process

B. deposit and progress payment

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 _____. A. nonsufficient funds B. growth trap C. charge back D. reconciling

B. growth trap

Reconciliation of bank and book balances helps to: A. estimate the bank ledger balance for managing the cash flow of a business. B. identify any mistakes made by either a bank or by a business. C. provide an approximate value of cash held by a business. D. exclude items on a bank statement that are not included in a business's accounting records.

B. identify any mistakes made by either a bank or by a business.

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) _____. A. consignment B. noncore project C. charge back D. arraignment

B. noncore project

Maintaining an inventory helps a business to have an optimal level of cash flow by: A. increasing the cost of carrying inventory. B. reducing the cost of processing orders. C. reducing cash inflow due to being out of stock. D. increasing cash outflow due to waste resources.

B. reducing the cost of processing orders.

Which of the following is a technique used by a small business to increase cash inflows? A. Making deposits and progress payments B. Forgoing any receivables C. Offering discounts for prompt payment D. Refusing any noncore paying projects

C. Offering discounts for prompt payment

Which of the following is defined as the practice of "pocketing" money from customers and hiding the theft by not recording the sale? A. Embezzlement B. Larceny C. Skimming D. Phony disbursement

C. Skimming

The sum of money that has actually been received and paid out of a depositor's account is termed _____. A. bank ledger balance B. company book balance C. bank available balance D. overdraft balance

C. bank available balance

The _____ is a schedule of the amounts and timings of payments of cash out of a business. A. comprehensive budget B. capital budget C. cash disbursements budget D. cash receipts budget

C. cash disbursements budget

Cash that can be obtained by selling the products and services of a business and collecting cash from customers is called: A. cash flow from subsidy. B. cash from financing. C. cash flow from operations. D. cash flow from investing.

C. cash flow from operations.