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module 2 business Flashcards

1
Q

accounting

A

the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other information

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2
Q

accounting cyle

A

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

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3
Q

bookkeeping

A

the recording of business transactions

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4
Q

double-entry bookkeeping

A

writing every business transaction in two places (helps with accuracy)

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5
Q

ledge

A

a specialized accounting book or program where information from accounting journals is put into specific categories and posted so managers can see it

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6
Q

financial statement

A

summary of all transactions that have occurred over a time period

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7
Q

fundamental accounting equation

A

assets=liability+owners’ equity (basis for balance sheet)

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8
Q

balance sheet

A

financial statement that reports a firm’s financial situation at a specific time and is comprised of three accounts (assets, liability, owners’ equity)

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9
Q

assets

A

things of value owned by the company

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10
Q

liquidity

A

how easy an asset can be turned into money

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11
Q

current assets

A

items that can or will be turned into cash in one year

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12
Q

fixed assets

A

assets that are relatively permanent (buildings, land, equipment)

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13
Q

intangible assets

A

long-term assets that have no real physical form but have value (patents, trademarks, copyrights)

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14
Q

liabilities

A

debts the business owes to others

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15
Q

accounts payable

A

current debts or bills the company owes to others for merchandise or services credited but not paid

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16
Q

notes payable

A

short or long term debts that a business promises to pay by a certain date

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17
Q

bonds payable

A

long term debts that represent money lent to the firm by bondholders that must be paid back

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18
Q

owners’ equity

A

the amount of the business that belongs to the owner minus liabilities owed by the business

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19
Q

retained earnings

A

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

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20
Q

income statement

A

financial statement that shows a firm’s profit after costs, expenses, and taxes. Summarizes revenue

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21
Q

net income or net loss

A

revenue left over after all costs and expenses, including taxes, are paid

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22
Q

cost of goods sold

A

measure of the cost of merchandise sold or cost of raw materials and supplies used to produce items

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23
Q

gross profit

A

how much a firm earned by buying/ making and selling merchandise

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24
Q

operating expenses

A

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

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25
depreciation
the systemic write-off of the cost of a tangible asset over its estimated useful life
26
statement of cash flows
financial statement that reports cash receipts and disbursement related to the firm's three major activities (operations, investment, and financing)
27
cash flow
the difference between cash in and out of the business
28
ratio analysis
assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements
29
financial accounting
accounting information and analyses prepared for people outside the organization
30
annual report
yearly statement of the financial condition, progress, and expectations, of an organization
31
private accountant
accountant who works for a single firm, government agency, or nonprofit
32
public accountant
accountant who provides accounting services to individuals or businesses on a fee basis
33
certified public accountant (CPA)
accountant who passed a series of exams established by the american institute of certified public accountants (AICPA)
34
managerial accounting
accounting used to provide information and analyses to managers within the organization to assist them with decision making
35
auditing
reviewing and evaluation the records used to prepare the company's financial statements
36
independent audit
evaluation and unbiased opinion on the accuracy of a company's financial statemetns
37
tax accountant
accountant trained in tax law and responsible for preparing tax returns and developing tax strategies
38
government and not for profit accounting
accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget
39
finance
the function in a business that acquires funds for the firm and manages those funds within the firm
40
financial management
the job of managing a firm's resourcess so it can meet its goals and objectives
41
financial managers
managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm
42
cash flow forecast
a forecast that predicts cash inflows and outflows in future periods, usually months or quarters
43
budget
a financial plan that sets forth managements expectations, allocates the use of specific resources throughout the firm
44
capital budget
a budget that highlights a firm's spending plans for major asset purchases that often require large sums of money
45
cash budget
estimates cash inflows and outflows during a particular period like a month or quarter
46
operating (master) budget
the budget that ties together all of a firm's other budgets and summarizes its proposed financial activities
47
financial control
a process where a firm compares its actual revenues, costs, and expenses with its budget periodically
48
capital expenditures
major investments in either tangible long term assets such as land, buildings, and equipment or intangible assets like patents, trademarks, and copyrights
49
debt financing
funds raised through various forms of borrowing that must be repaid; these funds can be short or long term
50
equity financing
money raised from within the firm, from operations or through the sale of ownership in the firm (stock)
51
trade credit
the practice of buying goods and services now and paying for them later
52
secured loan
a loan backed by collateral, something valuable such as property
53
line of credit
a given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available
54
factoring
process of selling accounts receivable for cash, in relatively expensive
55
term-loan agreement
a promissory note that requires the borrower to repay the loan in specified installments
56
risk/return trade-off
principle that the greater the risk a lender takes in making a loan, the higher the interest rate required
57
venture capital (VC)
money that is invested in new or emerging companies that are perceived as having great profit potential
58
leverage
raising needed funds through borrowing to increase a firms rate of return
59
cost of capital
rate of return a company must earn in order to meet the demands of its enders and expectations of its equity holders
60
money
anything that people generally accept as payment for goods and services
61
barter
the direct trading of goods and services
62
money supply
amount of money the Fed makes available for people to buy things
63
reserve requirement
percentage of commercial bank's checking/savings accounts that must be physically kept in the bank or a non-interest-bearing deposit at the local Fed
64
open-market operations
the buying and selling of U.S government bonds by the Fed with the goal of regulating money supply
65
discount rate
interest rate the Fed charges for loans to member banks
66
commercial bank
a for-profit organization that receives deposits from individuals and businesses in the form of checking and savings accounts and then uses some of theses funds to make loans
67
demand deposit
technical name for a checking account; the money in a demand deposit can be withdrawn anytime on demand
68
time deposit
technical name for savings account; the bank can require prior notice before the owner withdraws money from the account
69
certificate of deposit (CD)
a time-deposit account that earns interest to be delivered at the end of the certificate's maturity date
70
savings and loan association (S&L)
financial institution that accepts both savings and checking deposits and provides home mortgage loans
71
credit unions
nonprofit member-owned financial cooperative that offers a variety of banking services like interest bearing checking accounts, short-term loans, financial counseling, life insurance, and home loans
72
nonbanks
financial organizations that accept no deposits but offer many of the services provided by regular banks
73
pension funds
money put aside by corporations, nonprofit organizations, or unions to cover part of the financial needs of members when they retire
74
FDIC (federal deposit insurance corporation)
an independent agency of the US that insures bank accounts
75
Deposit insurance fund (DIF)
covers all deposits above the FDIC limits at member banks
76
electronic funds transfer system (EFT)
a system that electronically performs financial transactions such as making purchases, bills, and receiving paychecks
77
smart card
an electronic funds transfer tool that is a combination credit card, debit, phone, driver's license card and more
78
letter of credit
a promise by the bank to pay the seller a given amount if certain conditions are met
79
banker's acceptance
a promise that the bank will pay some specified amount at a particular time
80
world bank (international bank for reconstruction and development)
bank primarily responsible for financing economic development
81
international monetary fund (IMF)
an organization that assists the smooth flow of money among nations

business (5 decks)

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