mgmt351 t3 ch8 – Flashcards
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Steps In Managing Cash
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understand the company's cash flow cycle, begin whittling down the length of the cash flow cycle
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Cash Budget
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nothing more than a cash map showing the amount and the timing of the cash receipts and the cash disbursements week by week or month by month
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Accounts Receivable
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a creditor's accounts of money owed to him
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Accounts Payable
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the amount of money owed, or payable, to a business's creditors
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Notice Of Filing
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if a company files for bankruptcy, the court notifies creditors with this document
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Proof Of Claim
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a form stating the name of an unsecured creditor and the amount of the claim against the debtor
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Security Agreement
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a contract in which a business selling an asset on credit gets a security interest in that asset (the collateral), protecting the company's legal rights in case the buyer fails to pay
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Lock Box
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customers send payments to a post office box the bank maintains
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Bartering
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exchaning goods and services for other goods and services
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Zero Based Budgeting
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a shift in the philosophy of budgeting. rather than build the current year's budget on increases from the previous year's budget, ZBB starts from a budget of zero and evaluates the necessity of every item
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Cycle Billing
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a company bills a portion of its credit customers each day of the month to smooth our uneven cash receipts
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Cash Flow
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measures a company's liquidity and its ability to pay its bills and other financial obligations on time by tracking the flow of cash into and out of the business over time
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What Should You Keep In Mind When Creating A Cash Budget?
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the more variable the sales pattern, the shorter the planning horizon should be
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What Are The Steps To Creating A Cash Budget?
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determine a minimum cash balance, forecast sales, forecast cash receipts, forecast cash disbursements, and establish end of month cash balance
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A Cash Budget Is Only As Accurate
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as the sales forecast from which it is derived
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When A Firm Sells Goods Or Services On Credit, How Does That Affect Cash Budgeting?
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they are omitted entirely from the cash budget
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Most Small Business Owners Generally
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underestimate cash disbursements
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What Are The "Big Three" Of Cash Management?
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accounts recievable, accounts payable, and inventory
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What Are The Steps To Building An Effective Credit Policy?
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screen customers carefully before granting credit, establish a firms written credit policy and letting every customer know in advance the company's credit terms, to send invoices promptly becasue customers rarely pay before they receive their bills
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What Should A Small Business Owner Do Once A Credit Account Becomes Past Due?
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take acition immediately, add finance charges to overdue accounts ???
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What Should He Do When A "Notice Of Filing" Is Recieved?
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create a file to track the events surrounding the bankruptcy and take action immediately
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Effecient Cash Managers Set Up A
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payment calander in order to both pay on time and take advatage of cash discounts for early payment
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What Are The Key Objectives That A Small Business Owner Must Have When Investing Surplus Cash?
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focus should be on the safety and the liquidity of the investments???
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What Does The Statement "Collection Of Accounts Receivable Lags Behind Sales" Mean?
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customers who purchase goods on credit may not pay until a month or more later
