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BE 401 key terms
Role of finance and Nature of Accounting
| Term | Definition |
|---|---|
| Accounting | the process of keeping and interpreting financial records |
| Accounts Payable | all money owed by the business to others |
| Accounts Receivable | all money owed to a firm by its customers |
| Acquisition of Funds | finance activity involving making decisions about financing |
| Administration of Assets | finance activity involving making decisions about a firm's investments |
| Asset(s) | anything of value that a business or individual owns |
| Capital Budgeting | a process in which a firm's financial managers determine which projects it should invest in |
| Capital Investment Decisions | decisions that determine which projects a business will invest in, how the investment(s) will be financed, and whether to pay dividends to shareholders |
| Capital Structure | a firm's mix of financing, usually some combination of debt and equity |
| Cash Conversion Cycle | ratio that refers to the number of days between a company paying for raw materials and receiving cash from selling the products made from those raw materials |
| Debt Funding | using money that is lent by a bank or other institution to finance a project |
| Dividend | a sum of money paid to an investor or stockholder as earnings on an investment |
| Equity Funding | using money from investors to finance a project in exchange for shares in the company |
| Finance | in business, the function that involves all money and money management matters |
| Financing | funding a business activity or project through debt, equity, or venture capital |
| Return on Capital | a measure of how well a business generates cash flow in relation to the capital it has already invested in itself |
| Venture Capital | invested money used for new business opportunities |
| Working Capital Management | management of a firm's current balance of assets and liabilities ; involves accounts payable and receivable, inventory, and cash |
| Accountant | an individual who has had specialized training in accounting procedures |
| Accounting | the process of keeping financial records |
| Accounting Cycle | a process or series of steps that businesses complete to maintain their financial records effectively |
| Accounting Standards | rules that accountants must follow when preparing financial statements |
| Accounting System | the methods and procedures used in consistently handling the business's financial information |
| Accrual Accounting Method | a method of accounting that records transactions at the time they occur even if no money changes hands at the time |
| Assets | anything of value that a business owns |
| Balance Sheet | a financial statement that captures the financial condition of the business at that particular moment |
| Bookkeeping | the steps of the accounting cycle that involve recording each business transaction ; the process of analyzing financial transactions, journalizing transactions, posting to ledgers, and balancing the books |
| Cash | currency and coins |
| Cash Accounting Method | an accounting method in which income and expenditures are recorded at the time the money changes hands |
| Cash Flow Statement | a financial summary with estimates as to when, where, and how much money will flow into and out of a business |
| Credit | the arrangement by which businesses or individuals can purchase now and pay later |
| Expenditures | the monies that a business spends ; also called expenses |
| Expenses | the monies that a business spends ; also called expenditures |
| Financial Accounting | a type of accounting that involves preparing and reporting financial data to external users who are not directly involved in business operations |
| Financial Statement | a summary of accounting information |
| Income | money received by a business or an individual from outside sources |
| Income Statement | a financial summary that shows how much money the business has made or has lost ; also called the profit-and-loss statement |
| Investors | those who invest their funds in a business ; may be owners or stockholders |
| Journal | a special book or computer program in which a business's transactions are recorded in the order in which they occur |
| Ledger | the accounting record for a specific department or area of the business |
| Liabilities | debts that the business owes |
| Managerial Accounting | a type of accounting that involves preparing and reporting financial data to internal users, usually managers, who need financial information to control day-to-day operations and to make financial decisions and plans affecting the business |
| Net Worth | the total value of the business |
| Owner's Equity | the amount an owner has invested in the business plus or minus profits and losses |
| Transaction | A business activity such as a sale, a purchase, or a return |
| Trial Balance | the listing of a business's different accounts and their current balances ; used to check the accuracy of journal and ledger entries |
Created by:
kimberly.a340
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