A cash acknowledgment is a notice sent to a cash buyer acknowledging receipt of their order. This notice may include an offer inviting the buyer to increase the purchase order and serves to reinforce positive feelings about the purchase and encourage future orders.
Cash at Bank refers to the total amount of money held in bank accounts by an individual or company. This can be in the form of current accounts or deposit accounts and is reflected in the balance sheet under current assets.
A type of hybrid pension plan in which each participant's benefit is stated as a hypothetical account balance, increased with pay credits for additional service and interest credits to reflect the passage of time.
Cash Basis or Cash Method is an accounting method primarily used by individual taxpayers, wherein income and deductions are recognized when money is received or paid.
An accounting method where transactions are recorded only when cash is received or paid. This method does not account for debtors, prepayments, creditors, accruals, stocks, and fixed assets.
A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. It records transactions chronologically and is frequently reconciled with the bank statement to ensure accuracy and integrity in financial reporting.
A detailed analysis of expected cash inflows and outflows over a specific period, crucial for managing liquidity and ensuring a business can meet its obligations.
A cash buyer is a customer who pays for goods or services by submitting cash, a check, or a money order with the order they make. Unlike credit transactions, the payment is made upfront.
A cash card is a plastic card that enables customers of retail banks to obtain cash from automated teller machines (ATMs) using a personal identification number (PIN). Many cash cards also function as cheque cards and debit cards.
A 'Cash Cow' is a term used in the Boston Matrix to describe a business unit or product that generates a steady, reliable cash flow with lower investment, often used to fund other ventures or pay down debt.
A crop that is grown primarily for sale to return a profit rather than for consumption by the farmer. Common examples include coffee, cocoa, and sugar in tropical regions, and grains and vegetables in temperate zones.
In the manufacturing industry, the cash cycle represents the interval between the outlay of cash to procure raw materials and the receipt of payment for the manufactured goods produced from them.
Cash disbursement refers to the amount of money paid out by a business or individual during a specific period for expenses, purchases, or other financial obligations.
A cash discount is a reduction in the invoice amount offered to customers to encourage early payment. By offering this discount, businesses can enhance cash flow and reduce the risk of non-payment.
A cash dispenser, also known as an Automated Teller Machine (ATM), is a specialized machine that allows bank customers to perform basic financial transactions without needing a branch representative.
A cash dividend is a distribution of a portion of a company’s earnings to its shareholders in the form of cash rather than additional shares. These dividends are paid net of income tax, and shareholders typically receive credit for the tax deducted.
Cash earnings refer to the income that a business generates from its operations after accounting for cash revenues and cash expenses, specifically excluding noncash expenses such as depreciation.
Cash Equivalence refers to the market value of an item if it were to be sold for cash. In real estate, this often represents the true value of a property, which can differ from the stated selling price due to various financial arrangements.
Cash equivalents are highly liquid investments that are readily convertible into a known amount of cash and are subject to an insignificant risk of changes in value.
Short-term, highly liquid investments that are capable of being converted into known amounts of cash without notice, typically maturing within three months when acquired.
Cash float refers to the notes and coins held by a business to ensure they can provide change to customers during transactions. This concept is essential for efficient cash management and smooth operational flow in day-to-day transactions.
Cash flow refers to the movement of cash into and out of a business, reflecting the inflows and outflows of capital within a specified period. It is a critical indicator of a company's financial health and sustainability.
Cash Flow at Risk (CFaR) is a financial metric used to quantify the risk to a firm's cash flows over a specific time period under normal market conditions. It leverages the concept of Value-at-Risk (VaR) to estimate the potential deviation in cash flows, helping firms to manage liquidity risk and financial planning.
A Cash Flow Statement is a financial document that shows the inflows and outflows of cash and cash equivalents for a business over a financial period. It is a crucial part of financial reporting.
The Cash Flow to Capital Expenditure (CapEx) Ratio analyzes a company's ability to maintain its plant and equipment using cash generated from its operations, excluding dividends, rather than relying on external borrowing.
A ratio for assessing the solvency of a company, calculated by dividing the cash flow from operations by the total liabilities. It indicates a company's ability to satisfy its debts.
Cash inflows are the cash receipts of a business, which include transactions such as sales of trading stock, receipts from debtors for credit sales, and disposals of fixed assets.
Cash management involves the planning, monitoring, and execution of a firm's policy regarding liquidity to ensure adequate availability of cash for operational needs, investment opportunities, and unforeseen expenses.
A market in which transactions are promptly completed, resulting in immediate transfer of ownership and payment upon delivery of a commodity.
A transaction requiring that goods be paid for in full by cash or certified check at the point of delivery. Also known as Collect on Delivery with the same abbreviation.
A Cash or Deferred Arrangement (CODA), commonly known as a 401(k) plan, is a retirement savings plan sponsored by an employer that allows employees to save and invest a portion of their paycheck before taxes are taken out.
A Cash Or Deferred Arrangement (CODA) is a type of retirement plan arrangement that allows employees to defer a portion of their income to a retirement plan, such as a 401(k), on a pre-tax basis.
A cash order is an order accompanied by the required payment at the time of the order. It differs from other types of orders where payment may be made at a later date. This ensures the vendor receives payment immediately upon the placement of the order.
Cash outflows are the financial transactions where a business expends cash, which is essential for managing liquidity and business operations.
A Cash Payments Journal is a specialized accounting book or log used to record all cash disbursements made by a business in a sequential manner.
The amount of cash or equivalent instruments held at any point in time. A commodity or securities trader or an investment company needs to monitor its cash position carefully to maintain adequate liquidity.
An important liquidity ratio indicating the extent of a bank's cash reserves relative to its total liabilities. Essential for ensuring a bank's ability to meet short-term obligations.
A Cash Receipts Journal is a specialized accounting ledger used to record all cash inflows received by a business, such as payments from customers, cash sales, and other receipts. Each entry is chronologically organized to ensure accurate tracking and reconciliation.
The Cash Receipts Journal is a specialized accounting ledger used to record all cash inflows received by an organization. This ledger often records cash deposits into the organization's bank account and may be combined with other journals for comprehensive cash flow tracking.
A machine used for recording cash and credit receipts from sales. It typically includes a paper tape to provide a receipt to customers and print each transaction. Sales are reconciled daily with actual cash and credit receipts, with entries logged into the appropriate journal.
Cash reserve refers to the cash kept by a person or business that is beyond their immediate needs. It acts as a safety net to cover unexpected expenses and provides liquidity during financial emergencies.
A cash sale refers to a transaction where the payment for the purchased goods or services is made immediately in cash, rather than via credit terms. Proper accounting entries for cash sales should be recorded in the cash book.
Cash surrender value refers to the amount a policyowner is entitled to receive from an insurance company upon surrendering a life insurance policy with cash value. This sum is the cash value stated in the policy minus any surrender charges and outstanding loans with interest.
Cash Throw-Off, often used interchangeably with Cash Flow, refers to the net amount of cash generated and available for use after accounting for cash outflows.
This key financial metric measures a company's liquidity by assessing its ability to meet short-term obligations using its cash and marketable securities.
Cash value refers to the amount of money a policyholder is entitled to receive upon the cancellation of a life insurance policy or the amount available for loans and withdrawals before the policy matures or is cashed out.
Cash Value Life Insurance provides a permanent life insurance option that includes a savings element, allowing policyholders to accumulate a cash reserve over time within their insurance policies.
Cash-flow accounting is an accounting method that focuses on the inflows and outflows of cash within a business, providing a clear picture of the company's liquidity.
A cash-flow budget is a tool that summarizes expected cash inflows and outflows of an organization over a budget period, usually prepared monthly. It serves as a planning aid to determine cash availability for investment or to identify cash deficits requiring additional finance.
A cash-generating unit (CGU) is a subset of assets, liabilities, and associated goodwill within a reporting entity that contributes to generating cash inflows in a largely independent manner from other parts of the organization.
Cash-on-Cash Return is a method of yield computation used for investments. It calculates the return on investment by dividing the annual dollar income by the total dollar invested. For example, a $10,000 investment that pays $1,000 annually has a 10% cash-on-cash return.
A day book utilized for recording payments of cash from an organization's bank account, often integrated with a cash-receipts journal to form a complete cash book.
Cashback refers to the option given to customers to receive cash back while making a purchase with a debit or credit card at a point-of-sale terminal.
A cashbook is an accounting book used to record all cash receipts and cash disbursements, and its balance ties closely to the cash account in the general ledger, which is reflected on the balance sheet.
A cashier is a person in a business who accepts payment in money and credit sales, provides change as needed, and records the transaction, generally assisted by a cash register.
A cashier's check is a secure payment instrument issued by a bank, which provides a guarantee that the payee will receive the check amount upon demand. It is drawn from the bank's own funds and is widely accepted in financial transactions.
A cashless society is an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or coins, but via the transfer of digital information (usually an electronic representation of money) between parties.
A cassette is an easy-to-hold reel of magnetic tape enclosed in a plastic case, used for storing audio or video recordings.
A part-time worker whose livelihood is achieved from irregular, often temporary work. Such work is often seasonal and is performed in several successive locations.
Casualty insurance provides coverage primarily for the liability of an individual or organization resulting from negligent acts and omissions, thereby causing bodily injury and/or property damage to a third party.
Casualty loss refers to the loss of property due to events such as fire, storm, shipwreck, or theft. Such losses are allowable as deductions from taxable income, net of any insurance reimbursements. To qualify, the loss must result from a sudden, unexpected, or unusual event. Personal casualty losses can be deducted only if they exceed a $100 floor and 10% of adjusted gross income.
Catastrophe Hazard refers to circumstances where there is a significant deviation of the actual aggregate losses from the expected aggregate losses, such as a major natural disaster where whole units or blocks of businesses are threatened. These hazards are often uninsurable by commercial insurance companies due to the extremity of the risk involved or the prohibitive actuarial premiums.
A major medical expense policy designed to pay all or nearly all expenses above a certain deductible amount, up to the limit of the policy.
Supplemental tax-deferred contributions to IRAs and other qualified plans allowed for individuals 50 years or older.
Specialty hard goods retailers that dominate a particular market segment, known as category killers.
A Cathode Ray Tube (CRT) is an electron device that projects electrons onto a viewing screen, controlled by magnetic fields, to create images. Historically, CRTs have been employed in devices such as television screens and computer terminals.
A Cathode Ray Tube (CRT) is a device that was widely used in traditional television sets and computer monitors. It produces images through the use of electron beams striking a phosphorescent surface.
Speculative stocks with short histories of sales, earnings, and dividend payments. Frequently noted during bull markets, analysts often observe that even the "cats and dogs" are experiencing upward movements.
A cause of action refers to a set of facts sufficient to justify a right to sue, providing the foundation for a valid lawsuit. This is distinct from a right of action, which is the legal entitlement to initiate a lawsuit.
Cause-and-effect allocation is a cost allocation method where the allocation base is a significant determinant of the cost. This method ensures accurate assignment of indirect costs to cost objects.
Cause-related marketing (CRM) is a strategic alliance between a business and a nonprofit organization to market an image, product, or service for mutual benefit and to address pressing social issues.
A warning, often written to a potential buyer, advising them to be cautious; it is commonly used to minimize liability for potentially deceptive trade practices by a seller or broker.
Caveat Emptor, a Latin term meaning 'Let the Buyer Beware,' is a doctrine of law indicating that the buyer assumes the risk in a transaction. Although traditionally buyers were solely responsible for due diligence, modern legal frameworks have incorporated requirements for sellers to disclose known defects.
CD-ROM stands for Compact Disc Read-Only Memory, a type of optical disc that stores data for computers in digital form, similar to audio CDs. They are commonly used for distribution of software, multimedia applications, and data storage.
A Collateralized Debt Obligation (CDO) is a type of structured financial product that pools together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.
In the context of accounting within the USA, the ceiling is an amount equivalent to the net realizable value of an asset. When using the lower of cost or market method for inventory valuation, the market value cannot exceed this upper limit.
A cell is the intersection of a row and a column in a table, particularly within a spreadsheet. It serves as the basic unit for storing data in programs such as Microsoft Excel, Google Sheets, and other spreadsheet applications.
A cellular layout is an organization of a production facility where items with similar processing requirements are grouped together.
A cellular telephone, or cell phone, is a wireless telephone that communicates through a network of antenna towers, commonly known as cells. Users are automatically transferred from cell to cell as they move, ensuring continuous communication.
Censure is an act by a governmental agency or professional organization indicating condemnation or significant disapproval of an action by an individual or firm. Censure typically results from a material wrongdoing in the performance of professional duties.
An annual survey conducted by the U.S. Department of Commerce where businesses report on product manufacturing and various activities from the past year.
A central bank provides financial and banking services for the government of a country and its commercial banking system, while also implementing the government's monetary policy.
The Central Business District (CBD) refers to the downtown section of a city, generally consisting of retail, office, hotel, entertainment, and governmental land uses with some high-density housing. It is often considered the heart of economic and commercial activities.
Central buying, a widely used chain store practice, involves consolidating all purchasing through a central or main office. This strategy ensures that shipments of merchandise are usually directed to the various branches of the store.
The foundational questions that address what a society decides to produce, the methods used for production, and the distribution of the products among its members.
Central planning involves the strategic development and coordination of organizational activities by a designated central agency. This approach limits communication and spontaneity but facilitates streamlined coordination within the organization.
A comprehensive guide to understanding the Central Processing Unit (CPU), its functions, components, and its importance in computer systems.
The central processing unit (CPU) is the primary component of a computer that performs most of the processing inside the computer. It executes instructions from programs by performing basic arithmetic, logic, control, and input/output (I/O) operations.
A measure that indicates the typical value of a distribution. It is used in statistics to summarize a set of data by identifying the central point within that set.
Centralization refers to the process or situation where decision-making authority is concentrated within the upper echelons of an organization, as opposed to being distributed among lower-level managers.
Centralized management occurs when day-to-day business operations are handled by appointed officers rather than the shareholders, a characteristic that indicates that an organization may be taxed as a corporation.
The Certainty Equivalent Method is a risk analysis technique in capital budgeting, where particularly risky returns are expressed in terms of the risk-free rate of return that would be their equivalent.
A certificate is a formal document that captures and authenticates a specific fact, such as a birth, marriate, or ownership stake. It serves as an official record and proof of particular information, playing a crucial role in legal and financial contexts.
A Certificate of Accrual on Treasury Securities, or CATS, is a type of U.S. Treasury security that primarily appealed to income investors for its deep discount and attractive eventual yield.
U.S. Treasury issues sold at a deep discount from face value. A zero-coupon security that pays no interest during its lifetime but returns the full face value at maturity. Ideal for retirement or education planning and cannot be called.
A Certificate of Deposit (CD) is a time deposit offered by banks, credit unions, and other financial institutions with a predetermined interest rate and maturity date.
A Certificate of Deposit (CD) is a debt instrument issued by a bank that usually pays interest. Institutional CDs are issued in denominations of $100,000 or more, while individual CDs start as low as $100. Maturities range from a few weeks to several years. Interest rates are set by competitive forces in the marketplace.
A Certificate of Deposit (CD) is a negotiable certificate issued by a bank in return for a term deposit, offering competitive interest rates and intended for attracting larger investors.
A Certificate of Eligibility (COE) issued by the Veterans Administration confirms an individual's eligibility for a VA mortgage loan based on honorable military service.
The certificate that brings a company into existence; it is issued to the shareholders by the Registrar of Companies when the company's constitutional documents have been received and approved. Until the certificate is issued, the company has no legal existence.
