Ch 7 Vocabulary

Question 1

Cash

Answer 1

Resources that consist of coins, currency, cheques, money orders, debit card slips, and bank credit card slips that are acceptable at face value on deposit in a bank or similar institution. p 350

Question 2

Cash equivalents

Answer 2

Short-term, highly trading liquid investments that can be easily sold, net of any bank overdrafts repayable on demand. p 363

Question 3

Compensating balance

Answer 3

A minimum cash balance required by a bank in support of a bank loan. p 363

Question 4

Deposits in transit

Answer 4

Amounts deposited and recorded by the depositor that have not yet been recorded by the bank. p 356

Question 5

NSF (not sufficient funds) cheque

Answer 5

(also known as a returned cheque) A cheque that is not paid by a bank, because there are insufficient funds in the bank account of the customer who wrote the cheque. p 355

Question 6

Outstanding cheques

Answer 6

Cheques issued and recorded by a company that have not yet been paid (cleared) by the bank. p 356

Question 7

Restricted cash

Answer 7

Cash that is not available for general use, but instead is restricted for a particular purpose. p 363