question

is the money that moves through the business in a continuous cycle.

answer

cash

question

___ companies are most likely to suffer cash shortages.

answer

young

question

is simply a "cash map" which shows the amount and the timing of cash receipts and cash disbursements over time.

answer

cash budget

question

Which of the following items appear on a cash budget?

answer

cash reciepts, cash dispersements (only when the transaction is expected to occur)

question

Once the owner determines an adequate minimum cash balance, what is the next step in creating a cash budget?

answer

forecast sales

question

Which of the following would be a potential source of information for a sales forecast?

answer

census reports, trade associations

question

When estimating the firm's end-of-month cash balance the owner should first:

answer

determine the cash balance at the beginning of the month

question

The "big three" of cash management include:

answer

1. accounts receivable 2. accounts payable

question

________ is simply the money owed the firm by customers because they've purchased goods or services on credit.

answer

accounts receivable

question

The first line of defense against bad debt losses is:

answer

detailed credit application

question

Which of the following are credit reporting services a small business owner could use to check a customer's credit?

answer

equifax, transunion, Veritas Credit Corp, Dun & Bradstreet, NACM.

question

An important source of credit information that collects information on small businesses that other reporting services ignore is:

answer

National Association of Credit Management (nacm.org)

question

Once a small business has established a firm written credit policy and communicated it, the next step in building an effective credit policy is to:

answer

send invoices promptly

question

An arrangement in which customers mail their payments on account to a post office box which the company's bank monitors, from which it collects the payments, and then immediately deposits the payments into the firm's interest-bearing account is called a:

answer

lockbox arrangment

question

A bank account that technically never has funds in it but is tied to another master account so that when checks are presented for payment the master account is debited, permitting the company to use its own money during the "float" period, is called a(n):

answer

zero balance account

question

When managing your accounts payable, as a small business owner you should:

answer

regulate your payments to vendors and suppliers to your advantage

question

Exchanging goods and services for other goods and services, or ________, is an effective way for a small business to conserve cash.

answer

bartering

question

The real benefit of barter for the entrepreneur is that:

answer

entreprenuers "pay" for products and services at their wholesale cost of doing business

question

The budgeting strategy that evaluates the necessity of every item on the budget each year by starting with a zero in each budget category is called:

answer

ZBB Zero Based Budgeting

question

________ is not one of the three estimates a financial analyst suggests.

answer

excessively optimistic and or taking past annual sales and dividing by 12.

question

Some businesses use ________, in which a company bills a portion of its credit customers each day of the month, to smooth out uneven cash receipts.

answer

cycle billing

question

The statement, "collection of accounts receivable lags behind sales," means that:

answer

customers who purchase goods on credit may not pay until a month or more later

question

By planning cash needs ahead of time, an entrepreneur is able to:

answer

1) Increase the amount and speed of cash flowing into company 2) Reduce amount of and speed of cash flowing

question

Marking down inventory items that don't sell will result in:

answer

keeping inventory lean and allows it to turn over frequently. ~ not tying up valuable cash

question

At the end of a(n) ________, a business turns the equipment back over to the leasing company with no further obligation.

answer

operating lease

question

At the end of a(n) ________, a business may exercise an option to purchase the equipment, usually for a nominal sum.

answer

capital lease

question

Entrepreneurs can trim costs by:

answer

cutting from areas not essential to business growth

question

Cash management involves:

answer

forecasting, collecting, dispersing, investing, and planning for the cash a company needs to operate

question

________ 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 a period of time.

answer

cash flow

question

What are the steps to creating a cash budget (not necessarily in order)?

answer

1) Determine an adequate minimum cash bal 2) Forecast Sales 3) Forecast cash r

question

The objectives of cash management are to adequately meet the cash demands of the business and to avoid retaining unnecessarily large cash balances.

answer

true

question

The longer a company's cash flow cycle, the more likely it is to encounter a cash crisis.

answer

true

question

Ideally, a small firm's cash balance should be two times its average weekly sales.

answer

false

question

The key factor in forecasting cash disbursements for a cash budget is to record them in the month when they are incurred, not when they are paid.

answer

false

question

According to the National Association of Credit Management, receivables are only the second most important item on the balance sheet.

answer

true

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