Cash includes petty cash, till box cash, cash in bank accounts, and the checks pending for deposit. For the small business owner, cash is critical to successful operation of the business. It is the blood in the business that allows it to breath and continue operations. It is important for the owner to understand cash management.

Bookkeeping – Cash Disbursements (Lesson 45)

Cash disbursements is the process of remitting payment to vendors, suppliers and third party contractual obligations.   Better managed offices pay bills in regular cycles including weekly and monthly obligations.   Preparation, reconciliation and actual check writing is commonly referred to as cash disbursements.   For the bookkeeper, this is a function of the day-to-day …

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Working Capital

Cash is the lifeblood of every business. Without cash a business operation can come to a standstill. Cash is one component of working capital, a term referring to current assets (Gross Working Capital) less payables and accrued expenses. The term is usually used in finance referring to the dollar value of flexibility management has to address expansion or …

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Insolvency and Bankruptcy – Know the Difference

Every business owner needs to know the difference between insolvency and bankruptcy.  Often these two terms are misunderstood and improperly used in conversation.  You need to know their correct meaning because both are used in civil law and both have different issues to address during the process.  In addition, understanding these two terms builds a …

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Quick Ratio – Definition, Explanation and Proper Use

The quick ratio is a formula used in business to identify the ability of a business to pay its current liabilities.  It is also known as the ‘Acid Test’ formula (ratio).  In the large markets this formula is one of the financial industry ratios used to value the stock of a corporation.  In the arena …

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Effective Internal Controls for Cash

All businesses should have internal controls to deter fraud, detect theft, and preserve assets.  Of all the assets, cash is the easiest to misappropriate.  Effective internal controls for cash prevent the proverbial hand in the cookie jar.   So how does a small business develop internal controls for cash?  What are good cash control systems and …

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