Q&A Hero

Q: Percentage of concession in gross invoice amounts provided to encourage prompt payment are called _____. A. receivables B. noncash incentives C. trade discounts D. charge backs

Q: Which of the following strategies is used by a business to decrease cash outflows? A. Refusing the trade discounts offered by suppliers B. Taking on noncore paying projects C. Trading goods and services using only money D. Avoiding the wastage of resources

Q: Maintaining an inventory helps a business to have an optimal level of cash flow by: A. increasing the cost of carrying inventory. B. reducing the cost of processing orders. C. reducing cash inflow due to being out of stock. D. increasing cash outflow due to waste resources.

Q: For a business to factor receivables, the _____ must have good credit ratings. A. suppliers B. business C. vendors D. customers

Q: _____ is a method of borrowing against receivables. A. Factoring B. Trading C. Discounting D. Reconciling

Q: Revenue-producing tasks and activities related to, but not part of, the primary strategy of a business, are called _____. A. discount projects B. charge backs C. noncore projects D. consignments

Q: A jewelry store promises to deliver custom-made wedding rings to a buyer within 2 weeks. However, it charges ten percent of the sales price in advance. In this example, which of the following techniques is the store using to increase cash inflows? A. It is offering discounts to customers for prompt payment. B. It is taking deposits and progress payments. C. It is factoring all receivables. D. It is taking on noncore paying projects.

Q: Cash payments received before a product is completed or delivered are called _____. A. overdrafts B. discounted payments C. payables D. deposits and progress payments

Q: Which of the following is a technique used by a small business to increase cash inflows? A. Making deposits and progress payments B. Forgoing any receivables C. Offering discounts for prompt payment D. Refusing any noncore paying projects

Q: Which of the following steps helps to protect cash from being stolen by employees? A. Running periodic credit checks on employees who have access to a business's finances B. Having internal and external audits and ignoring any variances in the budget C. Assigning only one person to authorize bill payments and to write the checks for payments D. Hiring an employee to examine every aspect of cash inflows of a business

Q: Which of the following is defined as the practice of "pocketing" money from customers and hiding the theft by not recording the sale? A. Embezzlement B. Larceny C. Skimming D. Phony disbursement

Q: Every month, David, an assistant at a shoe store, steals money from his employer, after it has been received and recorded in the books, by altering the accounting records in the company book. David's act falls under which of the following categories of theft? A. Shoplifting B. Embezzlement C. Skimming D. Phony disbursement

Q: _____ is a method that employees use to steal cash after it has been received and recorded in the company books. A. Racketeering B. Phony disbursement C. Skimming D. Embezzlement

Q: A _____ budget is also referred to as a master budget. A. comprehensive B. cash receipts C. cash disbursements D. capital

Q: The _____ is a schedule of the amounts and timings of payments of cash out of a business. A. comprehensive budget B. capital budget C. cash disbursements budget D. cash receipts budget

Q: _____ is a schedule of the amounts and timings of the cash coming into a business. A. Cash disbursements budget B. Cash receipts budget C. Comprehensive budget D. Capital budget

Q: A(n)_____ identifies when, how, and why money is expected to come into the business, and when, how, and why it is expected to leave. A. bearer B. overdraft C. charge back D. cash budget

Q: Reconciliation of bank and book balances helps to: A. estimate the bank ledger balance for managing the cash flow of a business. B. identify any mistakes made by either a bank or by a business. C. provide an approximate value of cash held by a business. D. exclude items on a bank statement that are not included in a business's accounting records.

Q: A reduction in the bank account of a merchant by a credit card company is termed _____. A. charge back B. liquidity C. overdraft D. reconciliation

Q: In a business, accepting payments by credit card causes significant differences between the bank and book balances because the credit card service provider: A. records the gross amount of each credit card sale. B. deposits the amount of the sale in the business's account on the date of the sale itself. C. deposits the sale amount in the business's account after deducting a service fee. D. retains the sale amount in the business's account in the event of customer challenge.

Q: _____ 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. A. Charge back B. Nonsufficient fund C. Reconciling D. Overdraft

Q: The information that the account holder knows about his or her account, but the bank does not know, includes: A. the amount of service charges taken from the account. B. any direct payments made to the account by the holder's customers. C. any deposits the holder has made after bank closing. D. the amount of any interest received or charged.

Q: The information that the bank knows about an account, but is not known by the account holder, includes: A. the checks written and mailed by an account holder but have not been received by the bank. B. the amount of any direct payments made in the account by the account holder's customers. C. deposits that the account holder has mailed or made after bank closing. D. the sum of cash inflows and cash outflows recorded in the holder's accounting records.

Q: Which of the following terms refers to the accounting process that identifies the causes of all differences between book and bank balances? A. Clearing house B. Float C. Charge back D. Reconciling

Q: A delay in delivering checks from the writer of a check to the recipient's bank is called _____. A. processing float B. overdraft C. availability float D. charge back

Q: A(n) _____ is a delay in transferring money among banks due to internal procedures. A. overdraft B. availability float C. charge back D. processing float

Q: Availability float and _____ float are the two primary causes of float. A. bank ledger B. reconciling C. charge back D. processing

Q: Delays in the movement of money among depositors and banks is referred to as a(n) _____. A. overdraft B. ledger balance C. float D. charge back

Q: A negative balance in a depositor's bank account is referred as a(n) _____. A. availability float B. overdraft C. ledger balance D. charge back

Q: An entity that processes checks and electronic fund transfers for banks and other financial organizations is called a _____. A. credit union B. clearinghouse C. float D. bearer

Q: The sum of money that has actually been received and paid out of a depositor's account is termed _____. A. bank ledger balance B. company book balance C. bank available balance D. overdraft balance

Q: _____ is the name given to the bank's accounting system for all recognized transactions that affect the account, including deposits, electronic transfers, service fees, and checks presented to the bank for payment. A. Bank ledger balance B. Company book balance C. Overdraft balance D. Bank available balance

Q: Which of the following maintains a record of the inflows and outflows in a cash account? A. Overdraft balance B. Bank available balance C. Bank ledger balance D. Company book balance

Q: A(n) _____ refers to the sum of cash inflows and cash outflows recorded in a firm's accounting records. A. company book balance B. bank ledger balance C. overdraft balance D. bank available balance

Q: Cash that can be obtained from stocks, bonds, land, buildings, or equipment that a business has is called: A. cash flow from operations. B. cash from financing. C. cash flow from subsidy. D. cash flow from investing.

Q: Cash that can be obtained by selling the products and services of a business and collecting cash from customers is called: A. cash flow from subsidy. B. cash from financing. C. cash flow from operations. D. cash flow from investing.

Q: The two forms of short-term financing are short-term debt and _____. A. bonds B. commercial paper C. marketable security D. demand deposit

Q: 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. A. commercial paper B. demand deposit C. marketable security D. short-term debt

Q: _____ are notes issued by credit-worthy corporations. A. Commercial papers B. Receivables C. Demand deposits D. Marketable securities

Q: _____ represent either ownership or debt of publicly held firms and government issued debt, in the form of bonds, notes, and bills. A. Demand deposits B. Marketable securities C. Set-asides D. Traveler's checks

Q: Checking and savings accounts are the most common forms of _____. A. commercial papers B. marketable securities C. demand deposits D. debt investments

Q: _____ make up most of the noncurrency cash which is available immediately. A. Marketable securities B. Debt investments C. Commercial papers D. Demand deposits

Q: Debt investments that mature in less than three months are an example of _____. A. currency B. cash equivalents C. demand deposits D. traveler's checks

Q: Currency is a form of cash represented by: A. stocks and bonds. B. bills and coins. C. commercial paper. D. demand deposits.

Q: A _____ is a form of money that can be immediately used to make payments. A. debt investment B. marketable security C. commercial paper D. traveler's check

Q: Which of the following is an example of a cash equivalent? A. Currency B. Commercial paper C. Demand deposit D. Traveler's check

Q: Money that is immediately available to be spent is called _____. A. receivable B. stock C. chargeback D. cash

Q: The amount that revenues exceed expenses is termed _____. A. interest B. credit C. profit D. overhead

Q: According to the definition provided by the U.S. Dallas Federal Reserve Bank, which of the following is one of the primary purposes of money? A. Creating competition B. Maximizing the wealth of all citizens equally C. Creating cash flow statements D. Making exchanges

Q: Susan, who is a florist, purchases her flowers on credit. Lucy, a customer, takes eight bouquets and promises to pay Susan within two weeks. The amount that Lucy owes Susan is termed _____. A. receivables B. deposits C. charge backs D. payables

Q: _____ refers to amounts that are owed to a business for merchandise that was sold on credit. A. Payables B. Deposits C. Receivables D. Charge backs

Q: Amounts owed to vendors for merchandise or services purchased on credit are called _____. A. receivables B. deposits C. charge backs D. payables

Q: The time required for a business to acquire resources, convert them into a product, sell the product, and receive cash from the sale is referred as the _____ cycle of a business. A. seasonal B. operating C. credit D. chargeback

Q: According to the poll conducted by the National Federation of Independent Business (NFIB), small business faced cash flow problems because of: A. delayed payments from customers. B. lack of seasonal fluctuation in sales. C. delayed payments from vendors. D. unexpected increases in taxes.

Q: The primary advantage of bartering is that it is essentially tax-free as long as no cash is involved.

Q: Noncash employee incentive is a strategy to decrease cash outflow.

Q: Cash flow management only involves steps to increase cash outflows.

Q: Factoring is a method of borrowing against payables.

Q: One technique to increase cash inflow is to offer discounts for delayed payments.

Q: The best prevention method for avoiding a cash flow problem is attending to and understanding the operations of a businessits patterns of generating cash inflows and outflows.

Q: To prepare a cash flow statement, the cash inflows and outflows are categorized under cash from operations, cash from investing, and cash from financing.

Q: A cash budget is the essential starting point for all financial and accounting considerations in a small business.

Q: Reconciling the differences between the bank and book balances gives a corrected bank balance and a corrected book balance which are identical.

Q: Delays in transferring money among banks due to internal procedures is called processing float.

Q: The bank available balance and the bank ledger balance will always show the same value.

Q: Financing may be in the form of cash donated to a business in return for ownership.

Q: A person or business entity that possesses a security is called a bearer.

Q: Commercial paper is transferable to other investors.

Q: Short-term debts are not transferable to other investors.

Q: Currency is the most common form of cash.

Q: The difference between revenue and expense is called sales.

Q: All money is considered currency, but all currency is not considered money.

Q: Many small businesses experience problems in cash flow management because of the mismatch between the timing of the receipt of cash and the timing of the need to expend cash.

Q: Cash-to-cash cycle is also referred to as operating cycle.

Q: Small businesses never experience any cash flow problems.

Q: Sharon handles a home-made gifts business which has gained popularity in her town. After Sharon moved into a big city, however, her marketing efforts could barely help her get just enough revenue to meet her costs. This means Sharon's business is at: A. economy of scale. B. monopoly. C. break-even point. D. bankruptcy.

Q: Eddie, the owner of a fast-food joint, finds that he spends far lesser when he bakes breads in dozens than when he bakes two or three loafs at a time. This idea of Eddie's is similar to the concept of: A. break-even point. B. economy of scale. C. economy of scope. D. monopoly.

Q: Breakeven point is the point at which: A. total costs equal gross revenue. B. fixed costs equal variable costs. C. total costs equal profit. D. variable costs equal gross revenue.

Q: _____ is the idea that it is cheaper (per item) to make many of an item than few. A. Inventory turnover B. Economy of scale C. Breakeven point D. Historical value

Q: Which among the following is an example of a variable cost? A. Lighting B. Security C. Shipping D. Cleaning