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
2
Q
Accounting used to provide information and analyses to managers inside the organization to assist them in decision making
A
Managerial accounting
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)
4
Q
Accounting information and analyses prepared for people outside the organization.
A
Financial accounting
5
Q
Yearly statement of the financial condition, progress, and expectations of an organization.
A
Annual report
6
Q
Accountant who works for a single firm, government agency, or nonprofit organization.
A
Private accountant
7
Q
Accountant who provides accounting services to individuals or businesses on a fee basis
A
Public accountant
8
Q
Accountant who passes a series of examinations established by the American Institute of Certified Public Accountants ( AICPA)
A
Certified public accountant
9
Q
Job of reviewing and evaluation the information used to prepare a company’s financial statements
A
Auditing
10
Q
An evaluation and unbiased opinion about the accuracy of a company’s financial statements
A
Independent audit
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)
12
Q
An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies
A
Tax accountant
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
14
Q
Six step procedure that results in the preparation and analysis of the major financial statements.
A
Accounting cycle
15
Q
Recording of business transactions
A
Bookkeeping
16
Q
Record book or computer program where accounting data are first entered.
A
Journal
17
Q
Practice is writing every business transaction in two places
A
Double entry bookkeeping
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
19
Q
Summary of all the financial data in the account ledgers that ensures the figures are correct and balanced
A
Trial balance
20
Q
Summary of all the financial transactions that have occurred over a particular period.
A
Financial statement
21
Q
Assets equal liabilities plus owners equity; this is the basis for the balance sheet
A
Fundamental accounting equation
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
23
Q
Economic resources (things of value) owned by a firm
A
Assets
24
Q
Ease with which an asset can be can converted into cash
A
Liquidity
25
Items that can or will be converted into cash within one year
Current assets
26
Assets that are relatively permanent, such as land, buildings, and equipment
Fixed assets
27
Long term assets that have no real physical form but do have value
Intangible assets
28
What the business owes to others (debts)
Liabilities
29
Current liabilities or bills the company owes to others for merchandise or services purchases on credit but not yet paid for
Accounts payable
30
Short term or long term liabilities that a business promises to repay by a certain date
Notes payable
31
Long term liabilities that represent t money lent to the firm that must be paid back.
Bonds payable
32
Amount of the business that belongs to the owners minus any liabilities owed by the business
Owners equity
33
Accumulated earning from a firm’s profitable operations that were reinvested in the business and not paid out to stockholders in dividends
Retained earnings
34
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
Income statement
35
Revenue left over or depleted after all costs and expenses, including taxes, are paid
Net income/net loss
36
Measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale
Cost of goods sold ( cost of goods manufactured
37
How much a firm earned by buying and selling merchandise
Gross profit or gross margin
38
Cost involved in operating a business, such as rent, utilities, and salaries
Operating expenses
39
Systematic write off of the cost of a tangible asset over its estimated useful life
Depreciation
40
Financial statement that reports cash receipts and disbursements related to a firm’s three major activities: operations, investments, and financing
Statement of cash flows
41
Difference between cash coming in and cash going out of business
Cash flow
42
Assessment of a firm’s financial condition using calculations and interpretations of financial ratios developed from the firm’s financial statements
Ratio analysis
43
Function in a business that acquires funds for the firm and manages those funds within the firm
Finance
44
Job of managing a firm’s resources so it can meets its goals and objectives
Financial management
45
Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm
Financial managers
46
Forecast that predicts revenues, costs, and expenses for a period of one year or less
Short term forecast
47
Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters
Cash flow forecast
48
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
Long term forecast
49
Financial plan that sets forth managements expectations and, on the basis of those expectations, allocated the use of specific resources throughout the firm
Budget
50
Budget that highlights a firm’s spending plans for major asset purchases that often require large sums of money
Capital budget
51
Budget that estimates cash inflows and outflows during a particular period like a month or a quarter
Cash budget
52
Budget that ties together the firm’s other budgets and summarizes its proposed financial activities
Operating or master budget
53
Process in which a firm periodically compares its actual revenues, costs, and expenses with its budget
Financial control
54
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
55
Funds raised through various forms of borrowing that must be repaid
Debt financing
56
Money raised from within the firm, from operations or through the sale of ownership in the firm
Equity financing
57
Funds needed for a year or less
Short term financing
58
Funds needed for more than a year usually 2-10 years
Long term financing
59
Practice of buying goods and services now and paying for them later
Trade credit
60
Written contract with a promised to pay a supplier a specific sum of money at a definite time
Promissory note
61
Loan backed by collateral, something valuable as property
Secured loan
62
Loan that doesn’t require any collateral
Unsecured loan
63
Given amount of unsecured short term funds a bank will lend to a business, provided the funds are readily available
Line of credit
64
Line of credit that’s guaranteed but usually comes with a fee
Revolving credit agreement
65
Organizations that make short term loans to borrowers who offer tangible assets as collateral
Commercial finance companies
66
Process of selling accounts receivable for cash
Factoring
67
Unsecured promissory notes of $100,000 and up that mature in 270 days or less
Commercial paper
68
Promissory note that requires the borrower to repay the loan in specific installments
Term loan agreement
69
Principal that the greater the risk a lender takes in making a loan, the higher the interest rate required
Risk/return trade off
70
Terms of agreement in a bond issue
Indenture terms
71
Bond issued with some form of collateral
Secured bond
72
Bond backed only by the reputation of the issuer also called a debenture bond
Unsecured bond
73
Money that is invested in new or emerging companies that are perceived as having great profit potential
Venture capital
74
Raising needed funds through borrowing to increase a firm’s rate of return
Leverage
75
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
76
First public offering of a corporations stock
Initial public offering (IPO)
77
Specialists who assist in the issue and the sale of new securities
Investment bankers
78
Large organizations such as pension funds, mutual funds, and insurance companies that invest their own funds or the funds of others
Institutional investors
79
Organization whose members can buy and sell securities for companies and individual investors
Stock exchange
80
Exchange that provides a means to trade stocks not listed in the national exchanges
Over the counter market
81
Nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically
NASDAQ (National Association of Securities Dealers Automated Quotations)
82
Federal agency that has responsibilities for regulating the various stock exchanges
Securities and Exchange Commission SEC
83
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
84
Shares of ownership in a company
Stocks
85
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
86
Part of a firm’s profits that the firm may distribute to stockholders as either cash payments or additional shares of stocks
Dividends
87
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
Common stock
88
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
Preferred stock
89
A corporate certificate indicating that a person has lent money to a firm or a government
Bond
90
Exact date the issuer of a bond must pay the principal to the bond holder
Maturity date
91
Payment the issuer if the bond makes to the bond holders for use of the borrowed money
Interest
92
Bonds that are unsecured and not backed by any collateral such as equipment
Debenture bonds
93
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
Sinking fund
94
Registered representative who works as a market intermediary to buy and sell securities for clients
Stockbroker
95
Using several different investment alternatives to spread the risk of investing
Diversification
96
Positive difference between the purchase price of a stock and it’s sale price
Capital gains
97
Action by a company that gives stockholders two or more shares of stock for each one they own
Stock splits
98
Purchasing stocks by borrowing some of the purchase cost from the brokerage firm
Buying stock on margin
99
High risk high interest bonds
Junk bonds
100
Organization that buys stocks and bonds and other investments, then sells shares in those securities to the public
Mutual fund
101
Collection of stocks, bonds, and other investments that are traded on exchanges but are traded more like individual stocks that like mutual funds
Exchange traded funds
102
Average cost of 30 selected industrial stocks used to give an indication of the direction of the stock market over time
Dow Jones industrial average
103
Giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses
Program trading
104
Anything that people generally accept as payment for goods and services
Money
105
Direct trading of goods and services for other good or services
Barter
106
Amount of money the Federal Reserve Band makes available for people to buy goods and services
Money supply
107
Money that can be accessed quickly and easily
M-1
108
Money including the M-1 plus money that may take a little more time to obtain.
M-2
109
M-2 plus big deposits like institutional money market funds
M-3
110
How many federal reserve banks are there?
12
111
Percentage of commercial banks checking and savings accounts that must be physically kept in the banks
Reserve requirement
112
Buying and selling of US government bonds by the Fed with the goal of regulating the money supply
Open market operations
113
Interest rate that the fed charges for loans to member banks
Discount rate
114
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
Commercial bank
115
Technical name for a checking account the money in a demand deposit can be withdrawn anytime on demand from the depositor
Demand deposit
116
Technical name for a savings account the bank can require prior notice before the owner withdraws money from a time deposit
Time deposit
117
Time deposit account that earns interest to be delivered at the end of the certificates maturity date
Certificate of deposit
118
Financial institution that accepts both savings and checking deposits and provides home mortgage loans
Savings and loan association
119
Nonprofit member owned financial cooperatives that offer the full variety of banking servicing to their members
Credit unions
120
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
Nonbanks
121
Amounts of money put aside by corporations, nonprofit organizations, or unions to cover part of the financial needs of members when they retire
Pension funds
122
Independent agency of the US government that insures bank deposits
Federal Deposit Insurance Corporation (FDIC)
123
Part of the FDIC that insures holders of accounts in savings and loan Associations
Savings association Insurance Fund (SAIF)
124
Computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks
Electronic funds transfer system (EFF)
125
Electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account
Debit card
126
Electronic funds transfer tool that is a combination credit card, debit card, phone card, drivers license card, and more
Smart card
127
Promise by the bank to pay the seller a given amount if certain. Conditions are met
Letter of credit
128
Promise that the bank will pay some specified amount at a particular time
Bankers acceptance
129
Bank primarily responsible for financing economic development also known as the international bank for reconstruction and development
World bank
130
Organization that assist the smooth flow of money among nations
International monetary fund (IMF)
