READINGS - Practical Ways of Getting the Most Out of Cash Flashcards
What is the benefit of consolidating bank accounts for a single property?
Easier access to information and better control of cash.
What is commingling of funds?
Paying the expenses of one property using cash from another property.
Is commingling of funds legal?
No, commingling of funds of different properties is illegal.
What should be done with receivables in cash management?
Collected as quickly as possible and deposited in the bank promptly.
What does it mean to disburse money slowly?
Finding ways to delay payments without adopting a policy of paying bills late.
What are two ways to control cash?
- Sound collection practices
- Taking advantage of discounts
What is a statement of cash flow?
A summary of cash receipts, disbursements, and net cash position for a period.
How may the statement of cash flow differ from the income statement?
Items on the income statement may not involve a cash transaction.
Why is depreciation expense not deducted in the statement of cash flow?
It does not involve a cash outlay.
What should be included in the cash-flow statement?
Any unusual cash flows, if possible.
When is an operating budget prepared?
Annually for each fiscal year.
When is a cash-flow budget prepared?
Once the operating budget is completed.
What is the purpose of a long-range budget?
As needed for planning and forecasting.
What is the period covered by an operating budget?
One year.
How often should an operating budget be updated?
Monthly or quarterly.
What is the typical period covered by a long-range budget?
Three to five years.
What is a target NOI?
Net Operating Income set as a goal.
What factors does a budget help to determine?
- Rentals
- Vacancies
- Disbursements
What is the purpose of monitoring cash flow?
To control cash flow and predict future income and expenses.
What decisions can a long-range budget support?
- Determining whether to sell or renovate
- Supporting financial decisions
Fill in the blank: A new budget for each fiscal year will be prepared _______.
[annually]
