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BA 115 Final Exam 1
Ch. 17 and 18
| Question | Answer |
|---|---|
| the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions | accounting |
| accounting used to provide information and analyses to managers inside the organization to assist them in decision making | managerial accounting |
| a professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accountants | certified management accountant (CMA) |
| accounting information and analyses prepared for people outside the organization | financial accounting |
| a yearly statement of the financial condition, progress, and expectations of an organization | annual report |
| an accountant who works for a single firm, government agency, or nonprofit organization | private accountant |
| an accountant who provide accounting services to individuals or businesses on a fee basis | public accountant |
| an accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA) | certified public accountant (CPA) |
| the job of reviewing and evaluating the information used to prepare a company's financial statements | auditing |
| an evaluation and unbiased opinion about the accuracy of a company's financial statements | independent audit |
| an accountant who has a bachelor's degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors | certified internal auditor (CIA) |
| an accountant trained in tax law and responsible for preparing tax returns or developing tax strategies | tax accountant |
| accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget | government and not-for-profit accounting |
| a six step procedure that results in the preparation and analysis of the major financial statements | accounting cycle |
| the recording of business transactions | bookkeeping |
| the record book or computer program where accounting data are first entered | journal |
| the practice of writing every business transaction in two places | double-entry bookkeeping |
| a specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place | ledger |
| a summary of all the financial data in the account ledgers that ensures the figures are correct and balanced | trial balance |
| a summary of all the transaction that have occurred over a particular period. | financial statements |
| the basis for the balance sheet Assets = Liabilities + Owner's Equity | fundamental accounting equation |
| financial statement that reports a firm's financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owner's equity | balance sheet |
| economic resources (things of value) owned by a firm | assets |
| the ease with which an asset can be converted into cash | liquidity |
| items that can or will be converted into cash within one year | current assets |
| assets that are relatively permanent, such as land, buildings, and equipment | fixed assets |
| long-term assets that have no real physical form but do have value, such as patents and copyrights | intangible assets |
| what the business owes to others; debt | liabilities |
| current liabilities are bills the company owes to others for merchandise or services purchased on credit but not yet paid for | accounts payable |
| short-term or long-term liabilities that a business promises to repay by a certain date | notes payable |
| long-term liabilities that represent money lent to the firm that much be paid back | bonds payable |
| the amount of the business that belongs to the owners minus any liabilities owed by the business | owners' equity |
| the accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends | retained earnings |
| the financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all of the resources that have com into the firm (revenue), all the resources that have left the firm, and the resulting net income | income statement |
| revenue left over after all costs and expenses, including taxes, are paid | net income or net loss |
| a measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale | cost of goods sold |
| how much a firm earned by buying (or making) and selling merchandise | gross profit |
| costs involved in operating a business, such as rent, utilities, and salaries | operating expenses |
| the systematic write-off of the cost of a tangible assets over its estimated useful life | depreciation |
| financial statement that reports cash receipts and disbursements related to a firm's three major activities; operations, investments, and financing | statement of cash flows |
| the difference between cash coming in and cash going out of a business | cash flow |
| the assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements | ratio analysis |
| the function in a business that acquires funds for the firm and manages those funds within the firm | finance |
| the job of managing a firm's resources so it can meets its goals and objectives | financial management |
| managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm | financial managers |
| forecast that predicts revenues, costs, and expenses for a period of one year or less | short-term forecast |
| forecast that predicts the cash inflows and outflows in future periods, usually months or quarters. | cash flow forecast |
| forecast that predicts revenues, costs, and expenses for a period longer than 1 year and sometimes as far as 5 or 10 years into the future | long-term forecast |
| a financial plan that sets forth managements's expectations, and, on the basis of those expectations, allocates the use of specific resources throughout the firm | budget |
| a budget that highlights a firm's spending plans for major asset purchases that often require large sums of money | capital budget |
| a budget that estimates cash inflows and outflows during a particular period like a month or a quarter | cash budget |
| the budget that ties together the firm's other budgets and summarized its proposed financial activities | operating budget |
| a process in which a firm periodically compares its actual revenues, costs, and expenses with its budget. | financial control |
| major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights | capital expenditures |
| fund raised through various forms of borrowing that must be repaid | debt financing |
| money raised from within the firm, from operations or through the sale of ownership in the firm (stock) | equity financing |
| funds needed for a year or less | short-term financing |
| fund needed for more than a year (usually 2 to 20 years) | long-term financing |
| the practice of buying goods and services now and paying for them later | trade credit |
| a written contract with a promise to pay a supplier a specific sum of money at a definite time | promissory not |
| a loan backed by collateral, something valuable such as property | secured loan |
| a loan that doesn't require any collateral | unsecured loan |
| a given amount of unsecured short-term funds a back will lend to a business, provided the funds are readily available | line of credit |
| a line of credit that's guaranteed but usually comes with a fee | revolving credit agreement |
| organizations that make short-term loans to borrowers who offer tangible assets as collateral | commercial finance companies |
| the process of selling accounts receivable for cash | factoring |
| unsecured promissory notes of $100,000 and up that mature (come due) in 270 days or less | commercial paper |
| a promissory not that requires the borrower to repay the loan in specified installments | term-loan agreement |
| the principle that the greater the risk a lender takes in making a loan, the higher the interest rate required. | risk/return trade off |
| the terms of agreement in a bond issue | indenture terms |
| a bond issued with some form of collateral | secured bond |
| a bond back only by the reputation of the issuer | unsecured bond |
| money that is invested in new or emerging companies that are perceived as having great profit potential | venture capital |
| raising needed funds through borrowing to increase a firm's rate of return | leverages |
| the rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders | cost of capital |
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