Study guide, chapter 14

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Short-term debt

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

Sole proprietorship

A business formed by an individual who is responsible for all debts and claims against the business is called a___

Credit reporting agency

A business that collects, collates, and reports information concerning an entity's use of debt is referred to as a___

Growth trap

A crisis in which there is a shortage of cash for expanding a business after an exponential increase in sales is termed___

Corporation

A legal "artificial" entity that is formed by filing specific documents with a state government is called a___

Overdraft

A negative balance in a depositors bank account is referred as a___

Availability float

A___ is a delay in transferring money among banks due to internal procedures

Debt

A___ is a legal obligation to pay money in the future

Profit

The amount that revenue exceed expenses is referred to as___

Debt-to-equity ratio

___ measures the extent to which a business can meet its obligations for the long haul

Cash budget

A___ identifies when, how, and why money is expected to come into the business, and when, how, and why it is expected to leave

Payables

Amounts owed to vendors for merchandise or services purchased on credit are called

Clearinghouse

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

Gift

Any valuable asset that is donated to a business without any obligation to replay or to give up any ownership interest is called a___

Operations

At the___ stage of a business, the emphasis of financial management is to build owner wealth, to conserve assets, to match cash inflows to outflows, and to maximise the return on capital assets by making optimal investing decisions

Demand deposits

Checking and saving accounts are the most common forms of

Bills and coins

Currency is a form of cash represented by

Cash equivalents

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

Float

Delays in the movement of money among depositors and banks is referred to as a___

Profit

The amount that revenues exceed expenses is termed

Grants

Gifts of money made to a business for a specific purpose are referred to as___

Demand deposits (1)

Make up most of the concurrency cash which is available immediately

Equity capital

Money contributed to businesses i return for part ownership of the business is called___

Cash

Money that is immediately available to be spent is called

Trade discounts

Percentage of concession in gross invoice amounts provided to encourage prompt payment are called___

Estimate the bank ledger balance for managing the cash flow of a business

Reconciliation of bank and book balances helps to:

Receivables

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

Marketable securities

Represent either ownership or debt of publicly held firms and government issued debt, in the form of bonds, notes and bills

Collateral

Something of value given or pledged as security for payment of a loan is called___

Growth

The emphasis of financial management during the___ phase is to obtain increasing amounts of cash inflows to pay for added inventory, productive assets and employees

Risk

The level of probability that an investment will not produce expected gain is called___

Using personal money

The most common strategy employed by small businesses for handling money shortages is___

The owners themselves

The number one source for financing for small businesses is from___

Bank available balance

The sum of money that has actually been received and paid out of a depositors account is termed___

Reconciling

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

Outside equity

___ is money from selling part of a business to people who are not and will not be involved in the management of the business

Return on equity

___ measure a management's effectiveness in using the invested capital of the business to provide profit

Leverage

___ ratios measure the relative risk that a business setback could cause bankruptcy

Liquidity

___ ratios measure the business's ability to pay debts and expenses that are due in the current accounting period

Non-sufficient fund

___ 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

Consignment

___ 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

Bank ledger balance

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


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