Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Understanding Business > Ch, 17,18,20 > Flashcards

Ch, 17,18,20 Flashcards

1
Q

The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested the information they need to make good decisions

A

Accounting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

A six-step procedure that results in the preparation and analysis of the major financial statements

A

Accounting Cycle

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

The recording of business transactions
(Bookkeepers divide a firm’s transactions into meaningful categories and post them into a record book or computer program called a journal.)

A

Bookkeeping

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

The practice of writing every business transaction in two places; done so they can check one list of transactions against the other for accuracy

A

Double-entry bookkeeping

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Steps in the account process

A

analyze documents
record transactions in journals
transfer
trial balance
prepare financial statements
analyze financial statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

A specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place

A

Ledger

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

A summary of all the financial data in the account ledgers that ensures the figures are correct and balanced

A

Trial balance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

A summary of all the transactions that have occurred over a particular period

A

Financial Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

The basis for the balance sheet

A

Fundamental accounting equation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Financial statement that reports a firm’s financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners’ equity

A

Balance sheet

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Economic resources (things of value) owned by a firm; items can be tangible or intangible

A

Assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q
A

The ease with which an asset can be converted into cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Three categories of assets

A

Current assets

Fixed Assets

Intangible assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What the business owes to others (debts)

A

Liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for

A

Accounts payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Short-term or long-term liabilities that a business promises to pay by a certain date

A

Notes payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Long-term liabilities that represent money lent to the firm that must be paid back

A

Bonds payable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

The accumulated earnings from a firm’s profitable operations that were reinvested in the business and not paid out to stockholders in dividends

A

Retained earnings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

The amount of the business that belongs to the owners minus any liabilities owed by the business
(The formula is assets minus liabilities.)

A

Owners’ equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What do we call the formula for the balance sheet? What three accounts does it include?

A

Fundamental accounting equation. This equation includes the following three accounts: assets, liabilities, and owners’ equity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Revenue left over after all costs and expenses, including taxes, are paid

A

Net income or net loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

The income statement reports the firm’s financial operations over a particular period of time, usually a year, a quarter of a year, or a month

A

The Income Statement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

is the monetary value a firm received for goods sold, services rendered, or other payments.

A

Revenue

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale

A

Cost of goods sold (or manufactured

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
How much a firm earned by buying (or making) and selling merchandise
Gross profit (or gross margin)
23
Costs involved in operating a business, such as rent, utilities, and salaries
Operating Expenses
24
The systematic write-off of the cost of a tangible asset over its estimated useful life
Depreciation
25
Net Profit or Loss Bottom line
Revenue minus sales returns, costs, expenses, and taxes over a period of time
26
Financial statement that reports cash receipts and disbursements related to a firm’s three major activities
Statement of cash flows
27
The difference between cash coming in and cash going out of a business
Cash flow
27
Three major activities of a firm
Operations, Investments, & Financing
28
Ratio Analysis for analyzing financial performance
The assessment of a firm’s financial condition using calculations and interpretations of financial ratios developed from the firm’s financial statements. (liquidity, profitability, leverage, & activity ratios)
29
Leverage ratios measure the degree to which a firm relies on borrowed funds in its operations.
Leverage (Debt) Ratios
29
(indirectly measures risk by telling us how much a firm earned for each dollar invested by its owners. We calculate it by comparing a company’s net income to its total owners’ equity.)
Return on equity
30
A financial plan that sets forth management’s expectations, and, on the basis of those expectations, allocates the use of specific resources throughout the firm.
budget
30
A budget that highlights a firm’s spending plans for major asset purchases that often require large sums of money.
capital budget
31
Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights.
capital expenditures
32
A budget that estimates cash inflows and outflows during a particular period like a month or a quarter.
cash budget
33
Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters. cash flow forecast
cash flow forecast
34
The rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders.
cost of capital
35
Funds raised through various forms of borrowing that must be repaid.
debt financing
36
Money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital).
equity financing
37
The process of selling accounts receivable for cash.
factoring
38
A process in which a firm periodically compares its actual revenues, costs, and expenses with its budget.
financial control
39
The function in a business that acquires funds for the firm and manages those funds within the firm.
finance
40
The job of managing a firm’s resources so it can meet its goals and objectives.
financial management
41
Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm.
financial managers
41
Raising needed funds through borrowing to increase a firm’s rate of return.
leverage
42
A given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available.
line of credit
42
The budget that ties together the firm’s other budgets and summarizes its proposed financial activities.
operating (or master budget)
43
The principle that the greater the risk a lender takes in making a loan, the higher the interest rate required.
risk/return trade off
43
A written agreement with a promise to pay a supplier a specific sum of money at a definite time.
promissory note
44
A promissory note that requires the borrower to repay the loan in specified installments.
term-loan agreement
44
A loan backed by collateral (something valuable, such as property).
secured loan
45
The practice of buying goods and services now and paying for them later.
trade credit
45
A loan that doesn’t require any collateral.
unsecured loan
46
bond
47
Money that is invested in new or emerging companies that are perceived as having great profit potential.
venture capital
48
Purchasing stocks by borrowing some of the purchase cost from the brokerage firm
buying stock on margin
49
The positive difference between the purchase price of a stock and its sale price.
capital gains
50
Bonds that are unsecured (no collateral)
debenture bonds
50
The most basic form of ownership in a firm; it confers voting rights and the right to share in the firm’s profits through dividends, if offered by the firm’s board of directors.
common stock
51
Buying several different investment alternatives to spread the risk of investing.
diversification
52
Part of a firm’s profits that the firm may distribute to stockholders as either cash payments or additional shares of stock.
dividends
52
Collections of stocks, bonds, and other investment that are traded on exchanges but are traded more like individual stocks than like mutual funds.
exchange-traded funds (ETFs)
53
The average cost of 30 selected industrial stocks, used to give an indication of the direction (up or down) of the stock market over time.
Dow Jones Industrial Average (the Dow)
54
The first public offering of a corporation’s stock.
initial public offering (IPO)
55
Specialists who assist in the issue and sale of new securities.
investment bankers
56
Large organizations—such as pension funds, mutual funds, and insurance companies—that invest their own funds or the funds of others.
institutional investors
57
The payment the issuer of the bond makes to the bondholders for use of the borrowed money.
interest
58
The exact date the issuer of a bond must pay the principal to the bondholder.
maturity date
59
high interest, high risk bonds
junk bonds
60
A nationwide electronic system that communicates over-the-counter trades to brokers.
NASDAQ
60
An organization that buys stocks and bonds and then sells shares in those securities to the public.
mutual fund
61
Exchange that provides a means to trade stocks not listed on the national exchanges.
over-the-counter (OTC) market
62
Stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold.
preferred stock
62
Giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses.
program trading
63
A condensed version of economic and financial information that a company must file with the SEC before issuing stock; the prospectus must be sent to prospective investors.
prospectus
64
A reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond.
sinking fund
65
A registered representative who works as a market intermediary to buy and sell securities for clients.
stockbroker
66
Evidence of stock ownership that specifies the name of the company, the number of shares it represents, and the type of stock being issued.
stock certificate
66
An organization whose members can buy and sell (exchange) securities for companies and investors.
stock exchange
67
Shares of ownership in a company.
stocks
68
5 C's of credit
Character, capacity, capital,conditions, collateral
69
5 major parts of the Federal Reserve
board of governors, federal open market committee (FOMC), twelve federal reserve banks, three advisory councils, member banks of the system
70
what are the standards for useful forms of money?
portability, divisibility, stability, durability, uniqueness
71
what are the 4 parts of the US Banking System?
commercial banks, savings & loans associations, credit unions, nonbanks
72
What is the formula for income statements?
revenue- cost of goods sold = gross profit-operating expenses = Net income before taxes - taxes = net income or loss
73
3 major activities on a statement of cash flows?
operations,investments, financing
74
what are the financial ratios?
liquidity r
75

Understanding Business (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions