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ownership > Chapter 9 > Flashcards

Chapter 9 Flashcards

1
Q

Accounting

A

system of recording and classifying a company’s financial transactions and summarizing and communicating those transactions in the form of financial statements

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2
Q

accounting equation

A

assets = liabilities + equity

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3
Q

accounts payable

A

account that includes vendors that the company owes money to

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4
Q

accounts receivable

A

account that includes customers that owe the business money

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5
Q

angel investor

A

wealthy

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6
Q

Assets

A

items a business owns and derives future use from

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7
Q

balance sheet

A

financial statement that summarizes a company’s financial condition according to the accounting equation

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8
Q

Bartering

A

exchanging goods or services for other goods or services instead of for cash

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9
Q

Bootstrapping

A

funding strategy that seeks to optimize use of personal funds and other creative strategies (such as bartering) to minimize cash outflows

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10
Q

breakeven point

A

level of operations that results in exactly enough revenue to cover costs

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11
Q

burn rate

A

rate at which cash outflow exceeds cash inflow

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12
Q

charitable organization

A

nonprofit company founded for altruistic purposes

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13
Q

Collateral

A

something of value pledged to secure a loan

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14
Q

contribution margin

A

gross profit from a single item sold

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15
Q

cost of goods sold

A

cost required to produce the product or service

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16
Q

Credit

A

lending of funds in exchange for a promise to repay

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17
Q

Crowdfunding

A

financing with investments of small amounts of money from a large number of people

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18
Q

debt financing

A

borrowing funds that must be repaid

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19
Q

Donation

A

financial gift intended to support an organization’s general operations

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20
Q

early stage

A

company lifecycle stage in which the product or service has begun development

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21
Q

Equity

A

owner’s interest in the assets of the business

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22
Q

equity financing

A

funds provided in exchange for a share of ownership in a business

23
Q

Expenses

A

costs incurred in the normal course of business operations

24
Q

financial statement

A

output of an accounting system that is used to make financial decisions

25
Q

financial viability

A

long-term financial sustainability of an organization to fulfill its mission

26
Q

Financing

A

raising money to fund the startup and operation of a business

27
Q

financing activities

A

section of the statement of cash flows that shows where new infusions of cash are coming from

28
Q

fixed assets

A

major purchases with a long life

29
Q

fixed costs

A

costs that do not change

30
Q

Funds

A

financial resources for acquiring assets

31
Q

Grant

A

financial gift intended to fund a specific goal or project

32
Q

gross profit

A

selling price of a product or service minus its direct costs

33
Q

income (profit-and-loss) statement

A

financial statement that describes how much a company earned while the business was operating and what costs were incurred to generate those revenues

34
Q

initial public offering (IPO)

A

process by which a company lists its ownership shares on a public stock exchange

35
Q

investing activities

A

section of the statement of cash flows that shows major purchases of equipment or facilities

36
Q

Liability

A

company’s debt to another party

37
Q

mature stage

A

company lifecycle stage in which the business has reached commercial viability

38
Q

Moonlighting

A

earning income from a source outside of one’s primary employ

39
Q

net income

A

revenue minus expenses

40
Q

operating activities

A

section of the statement of cash flows that shows day-to-day activities of the business

41
Q

profit margin

A

amount by which revenue exceeds costs

42
Q

program services

A

basic offerings that a nonprofit provides to generate a portion of its revenue to sustain operations

43
Q

Projection

A

forecast of the future operations of a business

44
Q

Revenue

A

amount a business earns through product sales or providing a service

45
Q

run rate

A

cost of running a business over a specified period of time

46
Q

seed stage

A

company lifecycle stage in which the business is largely still an idea

47
Q

statement of cash flows

A

financial statement that explains the sources and uses of the company’s cash

48
Q

sustainable strategy

A

strategy that can maintain an organization’s financial stability

49
Q

tax-exempt status

A

treatment under U.S. tax law that removes the burden of taxes from nonprofit organizations

50
Q

Valuation

A

estimate of a company’s worth

51
Q

variable costs

A

costs that fluctuate with the level of revenue

52
Q

venture capitalist

A

individual or investment firm that specializes in funding startup companies

53
Q

working capital

A

funds available for day-to-day operations

ownership (9 decks)

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