AFP - CTP Exam Prep Flashcards
capital
The longer-term sources of funds used by a company, such as long-term debt, preferred stock, and common equity.
cash position
The quantity of cash that a company is holding at a given point in time.
disaster recovery
The restoration of systems and communications after an event causes an outage.
economies of scale
A relationship that occurs when an increase in sales lowers the average cost per unit sold.
financial planning and analysis
An organizational function that involves determining the need for present and future funding to support operations. An important part of this function is the forecasting of revenues, income, and external financing required to support the company’s planned growth.
financial risk
The risk that the overall value of an organization may change in response to a change in interest rates, foreign exchange rates, or commodity prices.
liquidity
The ability of an organization to convert assets into cash quickly and without a significant risk of loss.
operating cycle
A representation of the flow of funds through a company from the acquisition of raw materials, through the production cycle and the sale of products or services, and finally to the collection of payments from customers.
Sarbanes-Oxley Act of 2002 (SOX)
US legislation that requires companies to evaluate and disclose their internal financial controls as they relate to financial reporting, and requires auditors to attest to, or confirm, the effectiveness of these controls. It further requires that chief executive officers and chief financial officers certify financial statements, and specifies fines and jail sentences for knowingly and willfully misstating information therein. The act also requires companies with publicly traded securities to maintain independent audit committees (of the board of directors) that can interact with the external auditor in an unfettered way.
shared services center
A department or operation within a multiunit organization tasked with supplying multiple business units and their respective divisions and departments with specialized services, such as information technology, human resources, or accounts payable services.
virtual bank accounts
A set of internal ledgers (each of which can have its own bank account number) with only the header account being a real (legal) account.
working capital
The sum of a company’s current asset accounts (primarily cash, accounts receivable, and inventory) less the sum of its current liability accounts (primarily payables and accrual accounts).
working capital gap
The time gap between a cash outflow and a cash inflow.
bank capital requirements
Rules or regulations that specify the amount of capital (usually defined as equity funds) the owners of a bank must contribute to the business.
Bank Secrecy Act of 1970 (BSA)
A US legislative act under which US banks (and, in many cases, companies and individuals) are required to perform due diligence by determining a customer’s identity and monitoring transactions for suspicious activity. The primary intent of the act was to deter money laundering and the use of secret foreign bank accounts.
central bank
An entity that is responsible for implementing and managing a country’s monetary policy, including the country’s money supply and interest rates.
Check Clearing for the 21st Century Act of 2003 (Check 21)
A US law that provided the basis for electronic clearing of checks by allowing the substitution of a copy or image of a check for the original document in the clearing process.
Consumer Financial Protection Bureau
An independent consumer protection entity within the US Federal Reserve that was created as part of the Dodd-Frank Act of 2010.
Electronic Signatures in Global and National Commerce Act of 2000 (E-SIGN Act)
US legislation that was enacted to support electronic commerce (e-commerce) initiatives and grant digital signatures the same legal status as handwritten ink signatures. It establishes the legal certainty of e-commerce transactions and provides a measure of confidence around the enforceability of electronic transactions.
escheatment
The process of turning over unclaimed assets to the government, in specific instances.
European Central Bank
The central bank for the European Union (EU). This entity conducts a unified monetary policy for the eurozone, which includes all EU members that have adopted the euro as their common currency.
European Union
A union of more than two dozen member countries in Europe that have organized to work toward common political, social, and economic interests.
Federal Deposit Insurance Corporation (FDIC)
An independent agency of the US federal government whose primary role is to protect depositors from losses caused by bank insolvency. It preserves and promotes public confidence in the US financial system by (1) insuring deposits in banks and thrift institutions up to a maximum of $250,000 per depositor; (2) identifying, monitoring, and addressing risks to the Deposit Insurance Fund (DIF); and (3) limiting the effect on the economy and the financial system when a bank or thrift institution fails.
Federal Open Market Committee (FOMC)
The committee of the US Federal Reserve that runs the open market operations that help to implement US monetary policy and control the money supply.