General Flashcards
intangible assets
long-term assets with no physical existence such as patents, copyrights, trademarks, and goodwill
current liabilities
short-term claims that are due within a year of date of balance sheet
long-term liabilities
claims that come due more than one year after date of balance sheet
owners’ equity
total amount of investment in company minus any liabilities; also called net worth
current ratio
solvency ratio which measures short-term debt-paying ability; computed as current assets divided by current liabilities
quick ratio
liquidity ratio which measures current short-term liquidity of firm; computed as (current assets - inventory - prepaid expenses) divided by current liabilities
debt/equity ratio
solvency ratio which measures contribution of lenders, suppliers, and creditors versus contribution made by shareholders; computed as total liabilities divided by owners’ equity
capital loss
amount by which net proceeds from resale of an asset fall short of adjusted cost basis, or book value, of the item
undepreciated capital cost
balance of the capital cost left for further depreciation at any given time
terminal loss
difference between the net selling price and the UCC at the time of disposition (assuming there are no other assets remaining in the class after the sale); terminal losses are 100% deductible expenses.
capital gain
amount by which net proceeds from the resale of an asset exceed the adjusted cost basis, or book value, of the item
CCA recapture
when a depreciable asset is sold, any CCA claimed during holding period that does not represent an actual decline in market value of the asset is considered to be taxable income at the time of disposition of the property; recapture of CCA occurs when the amount credited to thh class of a depreciable asset exceeds the UCC
infant
person who is under the age considered by provincial legislation to be an adult
non est factum
Latin phrase meaning “it is not my doing”; contract law defence allowing signing party to escape performance of a contract on the grounds that it is “fundamentally different from what he or she intended to execute or sign”
vicarious liability
where employers are responsible for negligent acts of their employees when those acts are committed in the course of their employment
consideration
right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility undertaken by the other; must be of some value in the eyes of the court, but does not have to be money
stare decisis
doctrine whereby the judge will interpret a statue in the same way as courts have done previously - courts follow former similar decisions; literally, “let the former decision stand”
injunction
remedy for breach of contract that either stops a party from doing something or requires a party to do something (called a mandatory injunction)
void contract
where a contract never existed at law and never had any legal effect
voidable contract
where a legally binding contract exists, but is void once repudiated by a party entitled to do so
unenforceable contract
where a contract exists at law but performance of the parties’ obligations cannot be enforced
conditions
essential terms of a contract, going to the heart or root of the agreement; without these most important terms, the parties would probably not have entered into the agreement.
warranties
terms of lesser importance in contract that do not have vital significance to the parties and will not have directly influenced them to enter into the contract as formulated
liquidity
speed with which an asset can be coverted into cash
currrent assets
assets that can or will be converted to cash within the next 12 months
fixed assets
long-term assets used by a company for more than a year, such as land, buildings, and machinery; also referred to as capital assets or property, plant and equipment
amortization
allocation of an asset’s original cost to the years in which it is expected to produce revenues; also called depreciation
stakeholders
individuals, groups, or organizations to whom a business has responsibility; the stakeholders of an organization include its employees, customers, suppliers, investors, the government, and society as a whole
professional ethics
branch of the science of morals that concerns the daily business conduct of professionals
Bennion’s principal factors of professionalism
academic basis, private practice, advisory function, tradition of service, representative institute, code of conduct
academic basis (Bennion’s principal factors)
every profession involves an intellectual or academic discipline, based on a course of education and tested by examinations; this “implies … professed attainments in special knowledge as distinguished from mere skill”
private practice (Bennion’s principal factors)
daily person-to-person interaction with individual clients and the requirement of acting only in their best interests, with standards beyond that of acting in the public’s interest or those of a corporate employer as a salaried employee
advisory function (Bennion’s principal factors)
a consulting or advisory role, including activities such as negotiating, managing, or coordinating the transaction that is the subject matter of the advice
tradition of service (Bennion’s principal factors)
an outlook that is “essentially objective and disinterested, where the motive of making money is subordinated to serving the client in a manner not inconsistent with the public good”
representative institute
a professional institute is a group of practicing members, all of whom share a common goal of promoting and maintaining an ideal of professional conduct in the interests of the public
code of conduct
a professional institution is typified by its internal organizational formalities, which include a written code of ethical conduct expressing the members’ concept of professional standards; all such codes attempt to regulate the profession generally, focusing on conduct and disciplinary measures
market segmentation
the process of separating, identifying, and evaluating the layers of a market to identify a target market
4 major groups of consumer products
unsought, convenience, shopping, and specialty
convenience products
relatively inexpensive items that require little shopping effort and are purchased routinely without planning
shopping products
items that are bought after considerable planning, including brand-to-brand and store-to-store comparisons of price, suitability, and style
specialty products
items for which consumers search long and hard, and for which they refuse to accept substitutes
unsought products
products that are unknown to the potential buyer or are known but not actively sought out by the buyer
process model of buying behaviour
marketing which helps to explain how customers go about the purchase of shopping goods: felt need, pre-purchase activity, purchase activity, post-purchase activity
Porter’s Five Forces
framework used to analyze a business’s competitive environment: substitute products, bargaining power of consumers, competitive rivalry, threat of new entrants, supplier bargaining power (Some Boys Can’t Tie Shoelaces)
PESTI analysis
macro-level view of factors that could affect a firm’s competitive environment: political, economic, socio-cultural, technological, international
Porter’s Value Chain Model
analyzes primary and support activities within a firm, with the goal of optimizing these activities based on the activity’s cost and its contribution to the firm’s competitive advantage
primary activities (PVCM)
inbound logistics, operations, outbound logistics, marketing and sales, customer relationship management/services
support activities (PVCM)
procurement/finances, technology development, human resource management, management & infrastructure
five primary sources of managerial power
legitimate, reward, coercive, expert, referent (first three based on occupied position, last two based on personal characteristics)
legitimate power
manager’s ability to influence behaviour of employees because of manager’s position in organization
reward power
manager’s ability to influence behaviour of employees through provision of rewards for desirable behaviour
coercive power
manager’s ability to influence behaviour of employees through use of penalties and threats
expert power
manager’s ability to influence behaviour of employees through their belief that the manager has expertise or knowledge
referent power
manager’s ability to influence employee behaviour based on that person’s personal liking or admiration for the manager or charismatic personality of the manager
four types of managerial power
sense of obligation, perceived dependence, belief in manager’s expertise, identification with manager
proxemics
the way people use space, including interpersonal distances and seating arrangements
paralanguage
elements of speech, such as intonation, that may affect the meaning of spoken words. Includes voice tone, speech rate, volume, dysfluencies such as “ums” or “ahs”, yawning, and laughing
perceptual defence
tendency of people to protect themselves against information that they find threatening; individuals hear what they want to hear and much of the rest gets ignored
stereotyping
tendency to infer attributes in a person based on a category to which that person may belong
projection
tendency to attribute our own thoughts, motives, and feelings into other people
expectancy
process of prior expectations exerting influence on how events, objects and people are perceived; often leads us to perceive what we expect to perceive
Fiedler’s contingency theory
the effectiveness of different types of leadership orientation depends on the extent to which the situation is favourable to the leader.
Maslow’s hierarchy of needs
physiological, safety, belongingness, esteem, self-actualization
halo/horn effect
when manager has an overall positive (halo) or negative (horn) perception of an employee in one area and applies that perception to other areas of the employee’s performance
management by objectives
most common method of appraising performance of management and professional staff; focuses on what an individual accomplishes or achieves on the job. Establish goals, enable employee to work towards goals, review performance, set new goals or plan of action to achieve goals if they were not attained
accrual basis of accounting
revenue/ expenses should be recognized by enterprise when they are earned/incurred, not necessarily received/paid; revenue/expense recognition principle
cost principle
historical cost of acquisition of an asset is recorded in financial statements
matching principle
expenses directly associated with revenues should be recognized in same period in which revenue is recognized; accrual or cash basis of accounting must be maintained consistently
book value
depreciated value of an asset carried in the balance sheet account balance; also called carrying value
materiality principle
materiality is the term used to describe the significance of financial statement information to decision makers; an item of information, or an aggregate of items, is material if it is probable that its omission or misstatement would influence or change a decision
objectivity principle
all accounting information should be reported based on objectively determined and verifiable data
consistency principle
once a business adopts one generally accepted accounting principle, the enterprise should follow that principe in the ensuing years
asset classes
tangible/intangible, current/non-current, financial/non-financial
financial asset
cash or contractual right to cash
double entry bookkeeping
underlying principle for double entry bookeeping is that an entry into one account must be “balanced” by an entry into another; debits must balanced by credits
accounting equation
assets - liabilities = owners’ equity (capital)
debits
used to record increases in asset accounts and decreases in both liability accounts and owners’ equity accounts
credits
used to record decreases in asset accounts and increases in both liability accounts and owners’ equity accounts
balance sheet
financial statement which summarizes assets, liabilities, and owners’ equity of a business at a specific date
depreciation
amount by which the value of improvements has decreased over time as a result of wear and tear or change in taste
income statement
lists an enterprise’s revenue and expenses for a specific period of time; the general format of the income statement is revenue - expenses = profit or loss
declining balance method of depreciation
each asset is placed in an account where a fixed percentage is applied to the asset’s depreciated value; the depreciation for the current year is then applied and the asest’s remaining balance declines each year. The only depreciation method permitted by the CRA
straight-line method of depreciation
annual depreciation expense is determined by dividing the asset cost less its residual value by the recovery period of the asset.
audit
as defined by CPA Canada, the highest level of assurance that can be provided on financial statements; provides reasonable assurance that the entity’s financial statements present fairly its financial position, financial performance, and cash flows in accordance with the applicable financial reporting framework
balance sheet
financial statement which summarizes assets, liabilities, and owners’ equity of a business at a specific date
depreciation
amount by which the value of improvements has decreased over time as a result of wear and tear or change in taste
income statement
lists an enterprise’s revenue and expenses for a specific period of time; the general format of the income statement is revenue - expenses = profit or loss
declining balance method of depreciation
each asset is placed in an account where a fixed percentage is applied to the asset’s depreciated value; the depreciation for the current year is then applied and the asset’s remaining balance declines each year; the only depreciation method permitted by the CRA
straight-line method of depreciation
annual depreciation expense is determined by dividing the asset cost less its residual value by the recovery period of the asset
