BUSN FINAL Flashcards
Accounting
the process of collecting, recording, classifying, summarizing, reporting, and analyzing financial activities
What accountants do (accounting careers)
Financial accounting, managerial accounting, and auditing
financial accounting
accounting that focuses on preparing external financial reports that are used by outsiders such as lenders, suppliers, investors, and government agencies to assess the financial strength of a business
managerial accounting
accounting that provides financial information that managers inside the organization can use to evaluate and make decisions about current and future operations
auditing
the process of reviewing the records used to prepare financial statements and issuing a formal auditor’s opinion indicating whether the statements have been prepared in accordance with accepted accounting rules
accounting terminology
balance sheet, assets, liabilities, owners’ equity, accounting equation, income statement, revenues, expenses, cost of goods sold, gross profit
balance sheet
a financial statement that summarizes a firm’s financial position at a specific point in time
assets
things of value owned by a firm
liabilities
what a firm owes to its creditors; also called debts
owners’ equity
the total amount of investment in the firm minus any liabilities; also called net worth. Includes owners’ investments (stock issues for a public company), net income, minus dividends since the inception of the company
accounting statement
assets = liabilities + owners’ equity
income statement
a financial statement that summarizes a firm’s revenues and expenses and shows its total profit or loss over a period of time
revenues
the dollar amount of a firm’s sales plus any other income it received from sources such as interest, dividends, and rents
expenses
the cost of generating revenues
cost of goods sold
the total expense of buying or producing a firm’s goods or services
gross profit
the amount a company earns after paying to produce or buy its product but before deducting operating expenses
What is Finance?
financial management, financial planning, investment(spending money), financing (raising money)
financial management
the art and science of managing a firm’s money so that it can meet its goals
financial planning
preparing the financial plan, which projects revenues, expenditures, and financing needs over a given period
investment (spending money)
investing the firm’s funds in projects and securities that provide high returns to their risks
financing (raising money)
obtaining funding for the firm’s operations and investments and seeking the best balance between debt (borrowed funds) and equity (funds raised through the sale of ownership in the business)
what finance professionals do (finance careers)
commercial banks, investment bankers, stockbroker
commercial banks
profit-oriented financial institutions that accept deposits, make business and consumer loans, invest in government and corporate securities, and provide other financial services (chapter 15)
investment bankers
help companies raise long-term financing. Firms that act as intermediaries, buying securities from corporations and governments and reselling them to the public
stockbroker
a person who is licensed to buy and sell securities on behalf of clients
finance terminology
equity, initial public offering (IPO), common stock, dividends, debt, bonds, interest
equity
a form of business financing consisting of funds raised through the sale of stock (i.e., ownership) in a business
initial public offering (IPO)
a company’s first sale of stock to the public
common stock
a security that represents an ownership interest in a corporation
dividends
payments to stockholders from a corporation’s profits
debt
a form of business financing consisting of borrowed funds that must be repaid with interest over a stated time period
bonds
long-term debt obligations (liabilities) issued by corporations and governments
interest
a fixed amount of money paid by the borrower (for a bond, loan, mortgage) to the lender (or bondholder) on a regular schedule
Marketing
the process of discovering the needs and wants of potential buyers and customers (whether organizations or consumers) and then providing goods and services that meet or exceed their expectations; Marketing is about creating exchanges. An exchange takes place when two parties give something of value to each other to satisfy their respective needs or wants.
5Ps
the traditional 4Ps of marketing: product, price, promotion, place (distribution), now with people added as a key marketing component, which together make up the marketing mix
Product
marketers use the term product to refer to goods, services, or even ideas
price
something given in exchange for a product; Price may be monetary or nonmonetary. Price has many names, such as rent, fees, charges, and others
place
some method of getting the product from the creator of the product to the customer; Place includes a myriad of important tasks: transportation, location, supply chain management (managing each entity that deals with the product in its route to the buyer), online presence, inventory, and atmospherics (how the office, store, or even the website looks)
promotion
methods for informing and influencing customers to but the product; promotion includes several different components:
traditional advertising
sales promotion
public relations
personal selling
social media
e-commerce
market segmentation
the process of separating, identifying, and evaluating the layers of a market in order to identify to a target market
target market
the specific group of consumers toward which the firm could direct its marketing efforts. It is often divided into segments so that marketing strategies can be directed to a more specific target
management
the process of guiding the development, maintenance, and allocation of resources to attain organizational goals
four primary functions of managers
planning
organizing
leading (leadership)
controlling
planning
the process deciding what needs to be done to achieve organizational objectives; identifying when and how it will be done; and determining who should do it
organizing
the process of coordinating and allocating resources to carry out an organization’s plans
leading (leadership)
the process of guiding and motivating others toward the achievement of organizational goals
controlling
the process of assessing the organization’s progress toward accomplishing its goals; includes monitoring the implementation of a plan and correcting deviations from the plan
types of planning
contingency plans
strategic planning
contingency plans
plans that identify alternative courses of action for very unusual or crisis situations
strategic planning
the process of creating long-range (one to five years), broad goals for the organization and determining what resources will be needed to accomplish those goals
leadership
the process of guiding and motivating others toward the achievement of organizational goals
leadership style
the relatively consistent way that individuals in leadership positions attempt to influence the behavior of others
power
the ability to influence others to behave in a particular way
coercive power
power that is derived from an individual’s ability to threaten negative outcomes
expert power
power that is derived from an individual’s extensive knowledge in one or more areas
legitimate power
power that is derived from an individual’s position in an organization
reward power
power that is derived from an individual’s control over rewards
referent power
power that is derived from an individual’s personal charisma and the respect and/or admiration the individual inspires
corporate culture
the set of attitudes, values, and standards that distinguishes one organization from another
