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World Of Business > Chapters 15-18 > Flashcards

Chapters 15-18 Flashcards

1
Q

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

A

Accounting

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2
Q

Accounting used to provide information and analyses to managers inside the organization to assist them in decision making

A

Managerial accounting

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3
Q

A professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been verified by the Institute of Certified Management Accountants.

A

Certified management accountant (CMA)

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4
Q

Accounting information and analyses prepared for people outside the organization.

A

Financial accounting

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5
Q

Yearly statement of the financial condition, progress, and expectations of an organization.

A

Annual report

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6
Q

Accountant who works for a single firm, government agency, or nonprofit organization.

A

Private accountant

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7
Q

Accountant who provides accounting services to individuals or businesses on a fee basis

A

Public accountant

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8
Q

Accountant who passes a series of examinations established by the American Institute of Certified Public Accountants ( AICPA)

A

Certified public accountant

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9
Q

Job of reviewing and evaluation the information used to prepare a company’s financial statements

A

Auditing

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10
Q

An evaluation and unbiased opinion about the accuracy of a company’s financial statements

A

Independent audit

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11
Q

An accountant who has a bachelors degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors.

A

Certified internal auditor (CIA)

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12
Q

An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies

A

Tax accountant

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13
Q

Accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget.

A

Government and not for profit accounting

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14
Q

Six step procedure that results in the preparation and analysis of the major financial statements.

A

Accounting cycle

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15
Q

Recording of business transactions

A

Bookkeeping

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16
Q

Record book or computer program where accounting data are first entered.

A

Journal

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17
Q

Practice is writing every business transaction in two places

A

Double entry bookkeeping

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18
Q

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

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19
Q

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

A

Trial balance

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20
Q

Summary of all the financial transactions that have occurred over a particular period.

A

Financial statement

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21
Q

Assets equal liabilities plus owners equity; this is the basis for the balance sheet

A

Fundamental accounting equation

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22
Q

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

A

Balance sheet

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23
Q

Economic resources (things of value) owned by a firm

A

Assets

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24
Q

Ease with which an asset can be can converted into cash

A

Liquidity

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25
Q

Items that can or will be converted into cash within one year

A

Current assets

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26
Q

Assets that are relatively permanent, such as land, buildings, and equipment

A

Fixed assets

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27
Q

Long term assets that have no real physical form but do have value

A

Intangible assets

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28
Q

What the business owes to others (debts)

A

Liabilities

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29
Q

Current liabilities or bills the company owes to others for merchandise or services purchases on credit but not yet paid for

A

Accounts payable

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30
Q

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

A

Notes payable

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31
Q

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

A

Bonds payable

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32
Q

Amount of the business that belongs to the owners minus any liabilities owed by the business

A

Owners equity

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33
Q

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

A

Retained earnings

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34
Q

Financial statement that shows a firm’s profit after costs, expenses, and taxes: it summarizes all the resources that have come into the firm(revenue), all the resources that have left the firm(expenses), and the resulting net income of net loss

A

Income statement

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35
Q

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

A

Net income/net loss

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36
Q

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 ( cost of goods manufactured

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37
Q

How much a firm earned by buying and selling merchandise

A

Gross profit or gross margin

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38
Q

Cost involved in operating a business, such as rent, utilities, and salaries

A

Operating expenses

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39
Q

Systematic write off of the cost of a tangible asset over its estimated useful life

A

Depreciation

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40
Q

Financial statement that reports cash receipts and disbursements related to a firm’s three major activities: operations, investments, and financing

A

Statement of cash flows

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41
Q

Difference between cash coming in and cash going out of business

A

Cash flow

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42
Q

Assessment of a firm’s financial condition using calculations and interpretations of financial ratios developed from the firm’s financial statements

A

Ratio analysis

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43
Q

Function in a business that acquires funds for the firm and manages those funds within the firm

A

Finance

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44
Q

Job of managing a firm’s resources so it can meets its goals and objectives

A

Financial management

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45
Q

Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm

A

Financial managers

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46
Q

Forecast that predicts revenues, costs, and expenses for a period of one year or less

A

Short term forecast

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47
Q

Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters

A

Cash flow forecast

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48
Q

Forecast that predicts revenues, costs, and expenses for a period longer that one year, and sometimes as far as five or ten years into the future

A

Long term forecast

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49
Q

Financial plan that sets forth managements expectations and, on the basis of those expectations, allocated the use of specific resources throughout the firm

A

Budget

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50
Q

Budget that highlights a firm’s spending plans for major asset purchases that often require large sums of money

A

Capital budget

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51
Q

Budget that estimates cash inflows and outflows during a particular period like a month or a quarter

A

Cash budget

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52
Q

Budget that ties together the firm’s other budgets and summarizes its proposed financial activities

A

Operating or master budget

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53
Q

Process in which a firm periodically compares its actual revenues, costs, and expenses with its budget

A

Financial control

54
Q

Major investments in either tangible long term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights

A

Capital expenditures

55
Q

Funds raised through various forms of borrowing that must be repaid

A

Debt financing

56
Q

Money raised from within the firm, from operations or through the sale of ownership in the firm

A

Equity financing

57
Q

Funds needed for a year or less

A

Short term financing

58
Q

Funds needed for more than a year usually 2-10 years

A

Long term financing

59
Q

Practice of buying goods and services now and paying for them later

A

Trade credit

60
Q

Written contract with a promised to pay a supplier a specific sum of money at a definite time

A

Promissory note

61
Q

Loan backed by collateral, something valuable as property

A

Secured loan

62
Q

Loan that doesn’t require any collateral

A

Unsecured loan

63
Q

Given amount of unsecured short term funds a bank will lend to a business, provided the funds are readily available

A

Line of credit

64
Q

Line of credit that’s guaranteed but usually comes with a fee

A

Revolving credit agreement

65
Q

Organizations that make short term loans to borrowers who offer tangible assets as collateral

A

Commercial finance companies

66
Q

Process of selling accounts receivable for cash

A

Factoring

67
Q

Unsecured promissory notes of $100,000 and up that mature in 270 days or less

A

Commercial paper

68
Q

Promissory note that requires the borrower to repay the loan in specific installments

A

Term loan agreement

69
Q

Principal that the greater the risk a lender takes in making a loan, the higher the interest rate required

A

Risk/return trade off

70
Q

Terms of agreement in a bond issue

A

Indenture terms

71
Q

Bond issued with some form of collateral

A

Secured bond

72
Q

Bond backed only by the reputation of the issuer also called a debenture bond

A

Unsecured bond

73
Q

Money that is invested in new or emerging companies that are perceived as having great profit potential

A

Venture capital

74
Q

Raising needed funds through borrowing to increase a firm’s rate of return

A

Leverage

75
Q

Rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders

A

Cost of capital

76
Q

First public offering of a corporations stock

A

Initial public offering (IPO)

77
Q

Specialists who assist in the issue and the sale of new securities

A

Investment bankers

78
Q

Large organizations such as pension funds, mutual funds, and insurance companies that invest their own funds or the funds of others

A

Institutional investors

79
Q

Organization whose members can buy and sell securities for companies and individual investors

A

Stock exchange

80
Q

Exchange that provides a means to trade stocks not listed in the national exchanges

A

Over the counter market

81
Q

Nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically

A

NASDAQ (National Association of Securities Dealers Automated Quotations)

82
Q

Federal agency that has responsibilities for regulating the various stock exchanges

A

Securities and Exchange Commission SEC

83
Q

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)

A

Prospectus

84
Q

Shares of ownership in a company

A

Stocks

85
Q

Evidence of stock ownership that specifies the name of the company, the number of shares it represents, and the type of stock being issued

A

Stock certificate

86
Q

Part of a firm’s profits that the firm may distribute to stockholders as either cash payments or additional shares of stocks

A

Dividends

87
Q

Most basic form of ownership in a firm; it confers voting rights and the right to share in firm’s profits through dividends, if approved by the firm’s board of directors

A

Common stock

88
Q

Stock that gives its owners preference in the payment of dividend and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold

A

Preferred stock

89
Q

A corporate certificate indicating that a person has lent money to a firm or a government

A

Bond

90
Q

Exact date the issuer of a bond must pay the principal to the bond holder

A

Maturity date

91
Q

Payment the issuer if the bond makes to the bond holders for use of the borrowed money

A

Interest

92
Q

Bonds that are unsecured and not backed by any collateral such as equipment

A

Debenture bonds

93
Q

Reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to the maturity so that enough capital will be accumulated by the maturity date to pay off the bond

A

Sinking fund

94
Q

Registered representative who works as a market intermediary to buy and sell securities for clients

A

Stockbroker

95
Q

Using several different investment alternatives to spread the risk of investing

A

Diversification

96
Q

Positive difference between the purchase price of a stock and it’s sale price

A

Capital gains

97
Q

Action by a company that gives stockholders two or more shares of stock for each one they own

A

Stock splits

98
Q

Purchasing stocks by borrowing some of the purchase cost from the brokerage firm

A

Buying stock on margin

99
Q

High risk high interest bonds

A

Junk bonds

100
Q

Organization that buys stocks and bonds and other investments, then sells shares in those securities to the public

A

Mutual fund

101
Q

Collection of stocks, bonds, and other investments that are traded on exchanges but are traded more like individual stocks that like mutual funds

A

Exchange traded funds

102
Q

Average cost of 30 selected industrial stocks used to give an indication of the direction of the stock market over time

A

Dow Jones industrial average

103
Q

Giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses

A

Program trading

104
Q

Anything that people generally accept as payment for goods and services

A

Money

105
Q

Direct trading of goods and services for other good or services

A

Barter

106
Q

Amount of money the Federal Reserve Band makes available for people to buy goods and services

A

Money supply

107
Q

Money that can be accessed quickly and easily

A

M-1

108
Q

Money including the M-1 plus money that may take a little more time to obtain.

A

M-2

109
Q

M-2 plus big deposits like institutional money market funds

A

M-3

110
Q

How many federal reserve banks are there?

A

12

111
Q

Percentage of commercial banks checking and savings accounts that must be physically kept in the banks

A

Reserve requirement

112
Q

Buying and selling of US government bonds by the Fed with the goal of regulating the money supply

A

Open market operations

113
Q

Interest rate that the fed charges for loans to member banks

A

Discount rate

114
Q

Profit seeking organization that receive deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans

A

Commercial bank

115
Q

Technical name for a checking account the money in a demand deposit can be withdrawn anytime on demand from the depositor

A

Demand deposit

116
Q

Technical name for a savings account the bank can require prior notice before the owner withdraws money from a time deposit

A

Time deposit

117
Q

Time deposit account that earns interest to be delivered at the end of the certificates maturity date

A

Certificate of deposit

118
Q

Financial institution that accepts both savings and checking deposits and provides home mortgage loans

A

Savings and loan association

119
Q

Nonprofit member owned financial cooperatives that offer the full variety of banking servicing to their members

A

Credit unions

120
Q

Financial organizations that accept no deposits but offer many of the services provided by regular banks (pensions, insurance companies, commercial finance companies, consumer finance companies, and brokerage houses

A

Nonbanks

121
Q

Amounts of money put aside by corporations, nonprofit organizations, or unions to cover part of the financial needs of members when they retire

A

Pension funds

122
Q

Independent agency of the US government that insures bank deposits

A

Federal Deposit Insurance Corporation (FDIC)

123
Q

Part of the FDIC that insures holders of accounts in savings and loan Associations

A

Savings association Insurance Fund (SAIF)

124
Q

Computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks

A

Electronic funds transfer system (EFF)

125
Q

Electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account

A

Debit card

126
Q

Electronic funds transfer tool that is a combination credit card, debit card, phone card, drivers license card, and more

A

Smart card

127
Q

Promise by the bank to pay the seller a given amount if certain. Conditions are met

A

Letter of credit

128
Q

Promise that the bank will pay some specified amount at a particular time

A

Bankers acceptance

129
Q

Bank primarily responsible for financing economic development also known as the international bank for reconstruction and development

A

World bank

130
Q

Organization that assist the smooth flow of money among nations

A

International monetary fund (IMF)

World Of Business (3 decks)

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