The Amount of Cash a Firm Needs to Be Able

question 89

Multiple Choice

The amount of cash a firm needs to be able to pay its bills is sometimes referred to as a(n) :

• A)operating balance.
• B)compensating balance.
• C)transactions balance.
• D)precautionary balance.
• E)payments balance.

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Definitions:

Total Revenues

The total amount of income generated by a business from its normal business operations, including sales of goods or services, before any expenses are deducted.

Income Summary

An account used in the closing process during the accounting cycle that summarizes the results of operations—revenues and expenses—before transferring the net income or loss to the owner's equity.

Revenue

The total amount of money generated by the sale of goods or services related to a company's primary operations before any expenses are deducted.

Expense Accounts

Expense accounts are used in accounting to track money spent or costs incurred in a company's operations.