SM Bus Management Ch 13

Which of the following statements regarding the cash budget are correct?

Business owners estimate expected incomes and expenses and when these transactions will occur in order to create the cash budget. It is the key to cash planning for small businesses. All business budgeting begins with a forecast of sales.

Payables are

amounts that are owed to vendors for merchandise or services purchased on credit.

Rewards that do not require payments of cash are called _________ incentives.

Blank 1: noncash

The ______ balance is the sum of money that has actually been received and paid out of a depositor's account.

bank available

The ______ balance is the sum of deposits and withdrawals recorded in a bank's accounting records.

bank ledger

Customers may overdraft their accounts by paying a check when _____.

the available balance is not sufficient to cover the check amount

Business can earn cash flow from operations, investing and ___________.

Blank 1: financing

is a medium of exchange accepted by the community.

money

Amounts that are owed to vendors for merchandise or services purchased on credit are known as ______.

payables

The practice of trading goods and services without the use of money is known as .

Blank 1: barter or bartering

______ are/is money that is immediately available to be spent.

Cash

In the context of a cash disbursements budget, which of the following factors are combined to predict the amount and timing of cash discharge? (Check all that apply.)

Estimate of expenses Knowledge of payment patterns

Which of the following are noncash incentives?

Stock options Time off Praise Extra vacation days

Rewards that do not require payments of cash are called ___________ incentives.

noncash

Using a computerized accounting system, which of the following documents may be generated that will indicate the amount of cash a business needs immediately? (Check all that apply.)

An accounts payable report An accounts receivable report

The _____________ __________ __________ is a schedule of the amounts and timings of payments of money out of a business.

Blank 1: cash Blank 2: disbursements Blank 3: budget

Which of the following statements about reconciling bank balances with a business' book balances are correct? (Check all that apply.)

Businesses should bank where online access to account information that is continuously updated is offered. The owner should reconcile company book balances with bank balances to avoid cash flow problems. Service charges, direct customer payments, interest received or charged, and returned checks will affect the bank balance.

Which of the following statements about the growth trap are correct? (Check all that apply.)

Businesses that grow at exponential rates often experience the growth trap. Growing produces more money, but cash is needed right away to grow, thus the business gets trapped. Too much good news may contribute to a growth trap because of a cash shortage.

______ is planning and tracking the amounts and timing of money to be received and paid during the business cycle.

Cash flow management

Which of the following reasons account for discrepancies in a bank depositor's bank ledger balance and the actual value of cash held by the bank?

Delayed cash transfers Delayed collection of deposits

A reduction in the sales price provided to credit customers for paying outstanding amounts in a timely manner is referred to as a _____________ for prompt payment.

Discount

Which of the following is a purpose for money? (Check all that apply.)

Facilitate exchange of unlike assets. Keep track of wealth. Measure the value of tangible and intangible things.

For all small businesses, the cash receipts budget is the same as the sales budget.

False

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

Growth trap

Which of the following are sources of cash?

Investment that a business has made, such as in stocks, bonds, and land. Selling a business' products and services & collecting cash from customers. Through financing through debt or equity.

Which of the following statements about barter are correct? (Check all that apply.)

It is widely practiced in the U.S. by small businesses. Barter alleviates the need for cash through trading goods and/or services. Some like-kind transactions for goods or services are not subject to Federal tax.

Which of the following is true of the bank available balance?

It may differ significantly from the bank ledger balance.

Which of the following statements regarding currency are correct? (Check all that apply.)

More than half of U.S. currency is held outside the U.S. According to the Federal Reserve, there is $1.7 trillion in circulation as of January 31, 2019. Currency consists of both bills and coins.

Which of the following elements are likely to be included under the recurring payments section of a cash flow report? (Check all that apply.)

Rent Wages

Which of the following are the most common means by which employees steal cash from their employers? (Check all that apply.)

Skimming Larceny and embezzlement Phony disbursements

Which of the following represents a best cash flow management practice? (Check all that apply.)

There should be enough cash available to meet a business' needs. Owners should understand how and when the business uses its cash. Accounts receivables should be closely monitored for late payments. Owners should be able to obtain cash quickly from a variety of sources.

Which of the following statements about consignments are correct? (Check all that apply.)

They are the norm in operating art galleries. Many industries like the salty snacks, used furniture, and sporting goods use consignments. An advantage is that they do not have to be paid for until sold.

Which of the following statements regarding discounts for prompt payment are correct?

They are used to motivate customers to pay their bills in full in a timely manner. They may be as much as 2% if the invoice is paid within 5 to 10 business days.

The company book balance reflects a business' internal accounting record of all transactions that affect ______.

cash

The Blank______ identifies when, how, and why cash is expected to coming into a business, and when, how, and why it is expected to leave.

cash budget

Assets that may be quickly converted to cash are called Blank______.

cash equivalents

A Blank______ budget is a schedule of the amounts and timings of the receipt of cash into a business.

cash receipts

Which of the following transactions go through a clearinghouse? (Check all that apply.)

checks drafts Electronic transfers

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

clearinghouse

The sum of the cash inflows and outflows recorded in a firm's accounting records is the ______ balance.

company book

The bills and coins printed by governments to represent money are called Blank______.

currency

Cash is

money that is immediately available to be spent.

A negative balance in a depositor's bank account is called .

overdraft

An accounting process that identifies the causes of all difference between book and bank balances is known as ______.

reconciling

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

Consignment

The most prevalent way employees steal cash from employers is through larceny and embezzlement.

False

Which of the following statements regarding cash equivalents are correct? (Check all that apply.)

They are assets that may be turned into cash in as little as a few hours. Businesses use cash equivalents to measure how much money is available to be spent. Examples of cash equivalents are marketable securities, commercial paper, and debt investments that mature in less than three months.

Percentage discounts from gross invoice amounts provided to encourage prompt customer payment is called Blank______.

trade discounts

Which of the following statements regarding trade discounts are correct? (Check all that apply.)

The rule of thumb for a trade discount is 1% or greater if the billing period is less than 30 days. One should compare the annual effective interest rate of the discount to the cost of borrowing from other sources. These discounts are given by suppliers and vendors to encourage customer to pay on time.