Cash and cash equivalent
Cash and cash equivalents refers to the line item on the balance sheet that reports the
value of a company's assets that are cash or can be converted into cash immediately.
Cash equivalents include bank accounts and marketable securities, which are debt
securities with maturities of less than 90 days.
Time Deposit
A time deposit is an interest-bearing bank account that has a date of maturity, such as a
certificate of deposit (CD). The money in a time deposit must be held for the fixed term to
receive the interest in full. Typically, the longer the term, the higher the interest rate that
the depositor receives.
Money market
The money market refers to trading in very short-term debt investments. At the wholesale
level, it involves large-volume trades between institutions and traders. At the retail level,
it includes money market mutual funds bought by individual investors and money market
accounts opened by bank customers.
money market is an organized exchange market where participants can lend and borrow
short-term, high-quality debt securities with average maturities of one year or less. It
enables governments, banks, and other large institutions to sell short-term securities to
fund their short-term cash flow needs. Money markets also allow individual investors to
invest small amounts of money in a low-risk setting.
Treasury bill
A treasury bill is a short-term financial instrument issued by the government. Because
they're backed by a country's own treasury, they're considered a low-risk investment and
the investor runs very little chance of losing money.
Treasury bills are issued when the government needs money for a short period. These
bills are issued only by the central government, and the interest on them is determined
by market forces.
Treasury bills, or T-bills, have a maximum maturity period of 364 days. So, they are
categorised as money market instruments (money market deals with funds with a maturity
of less than one year). At present, treasury bills are issued in three maturities — 91-day,
182-day and 364-day. In 1997 the government also issued 14-day immediate treasury
bills.
Petty cash fund
A petty cash fund is a small amount of company cash, often kept on hand (e.g., in a locked
drawer or box), to pay for minor or incidental expenses, such as office supplies or
employee reimbursements. A petty cash fund will undergo periodic reconciliations, with
transactions also recorded on the financial statements.
Imprest fund
An imprest fund is fixed-cash or a petty-cash fund in the form of currency or coin that has
been advanced to a cashier as "Funds Held Outside of the Department of the Treasury
(Treasury)".
Funds contained in imprests are regularly replenished, in order to maintain a fixed
balance. The term “imprest” can also refer to a monetary advance given to a person for a
specific purpose.
Bank reconciliation
The process of comparing your company's bank statements to your own records,
ensuring all transactions are accounted for.
An effective bank reconciliation process can identify any discrepancies in your company's
records and help prevent fraud and theft from your bank account.
The purpose of this bank reconciliation process is to detect any errors in recording
transactions. It also means the business has an up-to-date and accurate view of its exact
bank balance on a specified date.
Debit memos
A debit memo is used to denote an adjustment to a customer's account that reduces their
balance.
In banking, a debit memo notifies of an adjustment that can be related to banking fees,
such as service charges or bounced-check fees.
Debit memos are often used in accounting to rectify overpayments from customers.
Credit memos
A credit memo is an official written acknowledgement that money is owed back to a
customer. When you need to create a refund for a client, you can create a credit memo,
which is basically an invoice with a negative amount.
Deposit in transit
A deposit in transit is money that has been received by a company and recorded in the
company's accounting system. The deposit has already been sent to the bank, but it has
yet to be processed and posted to the bank account.
These deposits are called deposits in transit and cause the bank statement balance to
understate the company's actual cash balance. Since deposits in transit have already
been recorded in the company's books as cash receipts, they must be added to the bank
statement balance.
Outstanding check
a financial instrument that has not yet been deposited or cashed by the recipient. An
outstanding check is still a liability for the payor who issued the check. Checks that remain
outstanding for long periods of time run the risk of becoming void.
