Chapter 14
Cash Budget
A 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.
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.
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 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.
Money
A store of value that can be saved for later purchases
Payables
Amounts owed to vendors for merchandise or services purchased on credit (see receivables).
Receivables
Amounts that are owed to a business for merchandise that was sold on credit (see payables).
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 Payment
Cash payments received before product is completed or delivered.
Float
Delays in the movement of money among depositors and banks.
Money held in checking and savings accounts is called
Demand Deposits
A business may obtain cash through...
Financing
____is/are a financial crisis that is caused by a business growing faster than it can be financed.
Growth Trap
Common ways employees steal cash
Larceny Skimming Phony disbursements
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.
Noncore Projects
Revenue-producing tasks and activities related to, but not 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.
Marketable Securities
Stocks and bonds that are traded on an open market.
Currency
The bills and coins printed by governments to represent money.
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-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. aka Operating Cycle
Purposes of Money
To keep track of wealth or value
Purposes of Money
To make exchanges
Gaming the Payment Process
Using methods to appear to be paying bills on time, when in fact payment is being delayed or avoided.
Company Book Balance
Usually called the cash account
Cash flow from investing
When Cash can be obtained from investments the business has made, such as stocks, bonds, land, buildings, or equipment
Cash flow from operations
When cash can be obtained by selling the products and services of the business and collecting cash from customers.
Money
a medium of exchange accepted by the community or what people buy things with and sell things for.
Money
provides a standard for measuring value, so that the worth of different goods and services can be compared