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10 Cards in this Set

  • Front
  • Back
Speculative motive
The need to hold cash to take advantage of additional investment opportunities, such as bargain purchases.
Precautionary motive
The need to hold cash s a safety margin to act as a financial reserve.
Transaction motive
The need to hold cash to satisfy normal disbursement and collection activities associated with a firm's ongoing operations.
Float
The difference between book cash and bank cash, representing the net effect of checks in the process of clearing.
Lockboxes
Special post office boxes set up to intercept and speed up accounts receivable payments.
Cash concentration
The practice of and procedure for moving cash from multiple banks into the firm's main accounts.
Zero-balance account
A disbursement account in which the firm maintains a zero balance, tranferring funds in from a master account only as needed to cover checks presented for payment.
Controlled disbursement account
A disbursement account to which the firm transfers an amount that is sufficient to cover demands for payment.
Target cash balance
A firm's desired cash level as determined by the trade-off between carrying costs and shortage costs.
Adjustment costs
The costs associated with holding too little cash. Also, shortage costs.