Management and Organizational Studies 2310A/B Lecture Notes - Lecture 5: Passbook, Transaction Cost, Opportunity Cost

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2310A/B
• Professor: Jun Wang

Document Summary

Speculative motive: take advantage of additional investment opportunities, ex. Houses decrease its price the older it gets, so by saving money you can buy the house for a cheaper price. Transaction motive: safety margin to act as a financial reserve, normal disbursement and collection activities with ongoing, money used to pay of utilities, rent, etc. (on-going operations. Float: represents the net effect of cheques in the process of clearing. The difference between cash recorded by bank and: = cash balance recorded at the bank (available/collected. The cash you have right now: - cash balance recorded in the cash account (book/ ledger books balance) balance) Real cash is more important than book value. Disbursement float: generated when a firm writes cheques, available balance at bank book balance > 0. When you write a cheque to someone else. But the person receiving the money has not gotten the cash, so it is still in your bank.