Q2 - Entrep 🛋📈🤝💰 Flashcards
The systematic method of recording and processing financial transaction.
BOOKKEEPING
An employee of a small to midsize entity that performs the processing and recording of the day-to-day financial operations of a business.
Bookkeeper
After the bookkeeper records transactions, the ____ or the business owner will review the bookkeeper’s work and make the required adjusting entries before the company’s financial statements are finalized.
accountant
After the ____ records transactions, the accountant or the business owner will review the bookkeeper’s work and make the required adjusting entries before the company’s financial statements are finalized.
bookkeeper
The method of using debit and credit to record a transaction.
Double-entry bookkeeping
Father of Modern Accounting
Luca Pacioli
Italian Mathematician
Luca Pacioli
Debits and credits are used to record ____, which have a monetary impact on the financial statements of an organization.
business transactions
In the language of accounting, a ____ represents a transaction or relocation of funds from one account to another when using a double-entry accounting system.
Debit
A debit represents a transaction or relocation of funds from one account to another when using ____.
a double-entry accounting system
Instead of transactions with positive or neutral values, ____ represent a decrease in assets or an increase in liabilities.
credits
Represents a transaction or relocation of funds from one account to another when using a double-entry accounting system.
Debit
Represent a decrease in assets or an increase in liabilities.
Credits
Under double-entry accounting, every debit always has an equal corresponding credit, which keeps the following equation in balance. Always
keep this in mind:
Assets = Liabilities + Equity
Example of Assets:
Cash
Tangible assets (building, land, machinery, vehicles and inventory)
Example of Liabilities:
Accounts Payable (A/P)
Interest expense, taxes, etc.
Examples of Owner’s equity or Equity:
Rent, capital, profit
Accountants call this the accounting
equation, and it’s the foundation of
double-entry bookkeeping. If at any
point this equation is out of balance,
that means the bookkeeper has
made a mistake somewhere along
the way.
Assets = Liabilities + Equity
A report that shows the financial activities and performance of a business. It is used by lenders and investors to check a business’s financial health and earnings potential.
Financial Statement
Focuses on the revenue, expenses, gains, and losses of a company during a particular period.
Income statement
There is usually a very close relationship
between Sales and Cost of Sales (or Cost of
Goods Sold). Many Companies, in determining
their selling prices, conveniently add a specific
percentage mark-up or margin to the Cost of
Sales, thus establishing a predictable ratio
between the two items. If an enterprise decides
to slap a hundred percent mark-up on its Cost of
Sales, the Sales figure will double the Cost of
Sales. As a percentage, Cost of Sales will,
therefore, be fifty percent of Sales.
Income Statement Forecasting
A financial report that summarizes the financial state of a business at a point in time. It provides an overview of the value of a business’s assets, liabilities, and owner’s equity.
Balance Sheet
Forecasting what the Balance Sheet of an
enterprise will look like in the future
depends a lot on the future Sales. The
Current Assets of the balance Sheet
include Cash, Marketable Securities,
Accounts Receivables, Inventories (Raw
Materials, Work-in-Process, and Finished
Goods), and other current Assets. Assets
in the Balance Sheet must always equal
liabilities and owners’ equity.
Balance Sheet Forecasting
The cash that flows into and out of various financial assets for specific periods of time. It’s usually measured on a monthly or quarterly basis. It doesn’t measure the performance of any single asset but emphasizes how cash is moving.
Funds Flow
The financial forecaster should compute for the increase or decrease in the different items found in the Assets and Liabilities columns, when comparing the actual or previous year’s Balance Sheet and the Pro Forma Balance Sheet. Decreases in Assets and increases in Liabilities are sources of funds, while increases in Assets and Decreases in Liabilities are uses of funds.
Funds Flow Forecasting
Is a measurement of the amount of cash that comes into and out of your business in a particular period of time.
Cash Flow
The entrepreneur or finance manager is
concerned about the enterprise’s survival
on a day-to-day basis as well as its
long-term sustainability. Cash is a
precious commodity that will make the
enterprise live on and on. It is crucial,
therefore, to monitor and budget the
enterprise’s cash position on a daily,
weekly, monthly, and yearly basis.
Cash Flow Forecasting
This was introduced as a
method to evaluate business
investments.
Income and Cash payback
period
This would help the entrepreneur get a firmer grip on the viability of his or her enterprise.
Construction and forecasting of Financial Statements
Is a decision-making tool used by many businesses to help in
budgeting, planning, and estimating future growth.
Forecasting
In the simplest terms, ____ is the attempt to predict future
outcomes based on past events and management insight.
forecasting
