Chapter 15 - Principles of Business Management Vocab

Question 1

Financial management

Answer 1

The strategic planning and budgeting of funds for a firm

Question 2

Financial manager

Answer 2

Someone who sees the financial health of a company

Question 3

Master/Operating Budget

Answer 3

The costs for an entire organization. Inventory, sales, purchases, manufacturing, marketing, and operating expenses.

Question 4

Budget

Answer 4

A management tool that outlines a company’s planned cash flows.

Question 5

Capital Budget

Answer 5

Outlines the financial needs for significant purchases. Plant expansions, real estate, technology.

Question 6

Cash Flow Budget

Answer 6

An estimate of a company’s short-term cash inflow and outflow.

Question 7

Cash Flow

Answer 7

The amount of money a company receives and spends in a certain period of time.

Question 8

Short-term financing

Answer 8

Financing repaid within a year

Question 9

Line of credit

Answer 9

Credit that a manager can access at any time up to an amount agreed on between the bank and company

Question 10

Trade Credit

Answer 10

Buy now and pay later strategy that a company gives for the purchase of a good or service

Question 11

Demand deposit

Answer 11

Funds that can be withdrawn

Question 12

Collateral

Answer 12

An additional security that assures a lender that the borrower has an alternative way to repay the loan

Question 13

Secured Loan

Answer 13

A loan that requires a collateral

Question 14

Unsecured Loan

Answer 14

A loan that doesn’t require a collateral

Question 15

Non-bank leaders

Answer 15

Financial institutions that extend credit or loans but do not hold deposits

Question 16

Microloans

Answer 16

Small, short-term loans to small businesses

Question 17

Peer-to-peer lending

Answer 17

Individuals lend to each other

Question 18

Factoring

Answer 18

The process of selling accounts receivable to another party

Question 19

Commercial paper

Answer 19

Unsecure, short-term debt that matures in nine months or less.

Question 20

Securities

Answer 20

Investment interests such as debt (bands) and equity (stocks)

Question 21

Leverage

Answer 21

The practice of borrowing money to finance an investment with the thought of the profits being far greater than the interest paid on the money.

Question 22

Debt financing

Answer 22

When a company borrows money and is legally obligated to pay within a certain time period.

Question 23

Equity financing

Answer 23

Funds are generated by the owner of the company rather than borrowed outside.

Question 24

Bonds

Answer 24

Debt instruments used by companies or governments to raise capital to finance a large project.

Question 25

Accounting

Answer 25

Process of tracking a business’s income and expenses by recording its financial transactions.

Question 26

Managerial accounting

Answer 26

Information and analysis to managers within an organization so they can make informed business decisions

Question 27

Financial accounting

Answer 27

An area of accounting that produces financial documents to aid investors and creditors.

Question 28

Corporate Accounting

Answer 28

The part of an organization’s finance department responsible for gathering and assembling data required for key financial statements.

Question 29

Audity

Answer 29

the area of accounting responsible for reviewing and evaluating the accuracy of financial reports.

Question 30

Government and not-for-profit accounting

Answer 30

the type of accounting required for organizations such as legislative bodies and charities that are not focused on generating profits

Question 31

Tax Accounting

Answer 31

involves preparing taxes and giving people advice on tax strategies.

Question 32

Managerial accounting

Answer 32

provides information and analysis to managers within an organization so they can make informed business decisions.

Question 33

Certified management account (CMA)

Answer 33

Provides financial information to managers

Question 34

Certified public account (CPA)

Answer 34

Licensed and must satisfy rigorous

Question 35

Independent auditor

Answer 35

not otherwise affiliated with companies for which they offer opinions.

Question 36

Public accountant

Answer 36

not all public accountants are CPAs

Question 37

Private accountant

Answer 37

Employed by an organization for the purpose of maintaining financial control and supervising the accounting system.

Question 38

Tax accountant

Answer 38

Taxpayers can be individuals or corporations

Question 39

Forensic accountant

Answer 39

Often used in fraud and embezzlement cases.

Question 40

Sarbanes-Oxley Act (SOX)

Answer 40

It is an act that was created to protect investors from corporate accounting fraud.

Question 41

Revenue

Answer 41

The total income of a business

Question 42

Gross Profit

Answer 42

Tells you how much money a company makes just from the sale of its product and how efficiently it managements the cost to produce the products

Question 43

Net Income

Answer 43

Profit

Question 44

Gross Profit Margin

Answer 44

Determine the company’s profitability of production

Question 45

Long term liabilities

Answer 45

Includes debts or obligations owed by a company that are due in more than one year, such as mortgage loans for purchased land and buildings

Question 46

Short Term Liabilities

Answer 46

Can be known as current liabilities; are obligations that a company is responsible for paying within a year or less and are listed on the right handed side of the balance sheet

Question 47

COGS

Answer 47

The expenses a company incurs to manufacture and sell a product.

Question 48

Owners Equity

Answer 48

What is left over after you have accounted for all your assets and liabilities.

Question 49

Financing

Answer 49

Provide funding to a person