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Financial Management (Midterm) > Class 1 > Flashcards

Class 1 Flashcards

Reading: Ch. 1, Ch. 2

1
Q

accrual basis

A

an accounting system that recognizes revenues in the year that the organization satisfies a performance obligation by transferring goods or services to a customer or client (whether received or not) and the expenses in the year that resources are used

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2
Q

allocations

A

subdivisions of an appropriation into more detailed categories, such as responsibility centers, programs, or objects of expenditure. Sometimes, spending is further broken down into allotments

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3
Q

allotments

A

a system that allocates budget resources to specific time periods or for use only after a certain event occurs

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4
Q

appropriation

A

approval by the legislative body - be it a senate, assembly, town committee, or council - of spending for a specific line-item. Appropriations create the authorization for spending the amount in the budget

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5
Q

audit

A

an examination of records or procedures. A financial audit seeks to determine whether an organization has complied with relevant accounting standards, internal procedures, and externally imposed laws and regulations, while a performance audit seeks to determine whether an organization is efficient in its use of resources to provide goods and services

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6
Q

bad debts

A

amounts that are owed to the organization that are never collected

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7
Q

budget

A

a plan that provides a formal, quantitative expression of management’s plans and intentions or expectations

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8
Q

budget guidance memorandum

A

document that provides policies, goals, and performance expectations

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9
Q

capital assets

A

buildings or equipment with useful lives extending beyond the year in which they are purchased or put into service; also referred to as long-term investments, capital items, capital investments, or capital acquisitions

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10
Q

capital budget

A

plan for the acquisition of buildings and equipment that will be used by the organization in one or more years beyond the year of acquisition. A minimum dollar cutoff must be exceeded for an item to be included in the capital budget.

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11
Q

cash basis

A

accounting system under which revenues are recognized when cash is received and expenses are recognized when cash is paid

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12
Q

cash budget

A

plan for the cash receipts and cash disbursements of the organization

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13
Q

depreciation expense

A

amount of the original cost of a fixed asset allocated as an expense each year

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14
Q

domain

A

the scope of an organization’s operations in terms of what it does, where it does it, and the population it serves

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15
Q

encumbrance

A

an indication that a certain amount of money has been earmarked for a particular purpose and is no longer available for other uses

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16
Q

expenditure

A

term used instead of expense in modified accrual systems to contrast timing of recognition from when the item is used (expense under accrual) to when an obligation is incurred to pay for the item using current financial resources (expenditure under modified accrual)

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17
Q

expense

A

the cost of services provided; expired cost

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18
Q

financial budget

A

the cash budget and the capital budget together

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19
Q

fiscal year

A

one-year period defined for financial purposes. A fiscal year may start at any point during the calendar year and finishes one year later. For example, “FY 2021 with a June 30 year-end” refers to the period from July 1, 2020, through June 30, 2021

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20
Q

goal congruence

A

bringing together the goals, desires, and wants of the organization with those of its employees

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21
Q

goal divergence

A

natural differences between the goals, desires, and needs of the organization and those of its employees

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22
Q

long-range budget

A

plan that covers a period of time longer than 1 year, and is typically 3, 5, or 10 years

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23
Q

long-range plan

A

((same as long-range budget))

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24
Q

master budget

A

set of all the major budgets in the organization; generally includes the operating budget, long-range budget, program budgets, capital budget, and cash budget

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25
Q

matching

A

for a given unit of service provided, the revenues arising from providing that service and the expenses incurred in providing that service are both recorded in the same fiscal period

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26
Q

mill rate

A

the rate of taxation that a property owner must pay for each thousand dollars of the assessed valuation of a property; also known as the millage rate or mill levy

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27
Q

mission

A

organization’s set or primary goals that justify its existence

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28
Q

mission statement

A

statement of the purpose or reason for existence of an organization, department, or unit. This statement provides direction regarding the types of activities that the organization should undertake

29
Q

modified cash basis

A

basis for accounting under which routine revenues and expenses are recognized on a cash basis but capital assets are recognized as expenses gradually over the years they are used rather than all in the year the organization pays for them

30
Q

objects of expenditure

A

items required to provide goods and services, including salaries, inventory, rent, equipment, and other resources

31
Q

operating budget

A

plan for the day-in and day-out operating revenues and expenses of the organization. It is generally prepared for one year

32
Q

outcome

A

the result that the organization is trying to achieve

33
Q

output

A

the number of units of service provided. For example, the number of meals served

34
Q

profit

A

amount by which an organization’s revenues exceed its expenses

35
Q

recognition

A

the point at which a financial event is considered to have occurred and can be recorded in the financial records of the entity. The time of recognition differs under the cash and accrual bases of accounting

36
Q

responsibility center

A

part of the organization, such as a department or a unit, for which a manager is assigned responsibility

37
Q

revenue

A

amounts of money that the organization has received or is entitled to receive for satisfying a performance obligation by transferring goods or services to a customer or client

38
Q

special purpose budget

A

a plan for a specific project, program, or activity not covered by another budget

39
Q

strategic plan

A

plan that defines a broad set of goals for the organization and selects the primary approaches that the organization will take to achieve those goals

40
Q

strategy

A

broad plan for the attainment of goals

41
Q

support

A

funding that consists of contributions or grants

42
Q

allowance for uncollectible accounts

A

estimated portion of total accounts receivable that is expected not to be collected because of bad debts; sometimes called allowance for bad debts

43
Q

accounting

A

system for keeping track of the financial status of an organization and the financial results of its activities

44
Q

creditors

A

people or organizations to whom the organization owes money

45
Q

debt

A

liability; an amount owed by one individual or organization to another

46
Q

deficit

A

the excess of spending over receipts; excess of expenses over revenues. This term sometimes is used to refer to the current year or budgeted year and sometimes to an amount that has been accumulated over a period of years

47
Q

depreciation

A

amount of the original cost of a fixed asset allocated as an expense each year

48
Q

effectiveness

A

a measure of the degree to which the organization accomplishes its desired goals

49
Q

efficiency

A

a measure of how close an organization comes to minimizing the amount of resources used for the result attained

50
Q

federal funds rate

A

the interest rate banks charge when lending to each other on an overnight basis

51
Q

finance

A

field that focuses on the alternative sources and uses of the organization’s financial resources such as cash, marketable securities, and debt

52
Q

financial accounting

A

system that records historical financial information, summarizes it, and provides reports of what financial events have occurred and of what the financial impact of those events has been

53
Q

financial management

A

the subset of management that focuses on generating financial information that can be used to improve decision making

54
Q

fiscal

A

financial

55
Q

gross federal debt

A

the debt issued by the US Treasury that is outstanding

56
Q

inventory

A

materials and supplies held for use in providing services or making a product

57
Q

managerial accounting

A

generation of any financial information that can help managers to manage better

58
Q

national debt

A

the total cumulative amount that the federal government has borrowed and not repaid, because its spending has exceeded its receipts

59
Q

net asset

A

the equivalent of owners’ equity in a not-for-profit organization; assets less liabilities

60
Q

not-for-profit

A

an entity that (a) gets contributions from providers who do not expect an equal return, (b) has goals other than providing goods and services for a profit, and (c) has an absence of ownership interest

61
Q

off-budget

A

items that are not included in the normal federal government budget process (e.g. Social Security)

62
Q

on-budget

A

items that are included in the normal federal government budget process

63
Q

payables

A

short-term obligations

64
Q

proprietary

A

organization whose mission includes earning a profit that may be distributed to its owners; “for-profit”

65
Q

receivable

A

money owed to the organization or individual in exchange for goods and services it has provided; “accounts receivable”

66
Q

sequestration

A

in the context of federal budget, sequestration entails cross-the-board cuts to discretionary spending

67
Q

surplus

A

an excess of receipts over spending (e.g. profit)

68
Q

tax-exempt

A

organizations that are exempt from federal income tax liabilities

69
Q

vendor

A

supplier who sells to an organization

Financial Management (Midterm) (1 decks)

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