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40 Cards in this Set
- Front
- Back
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Name the two economic concepts |
Microeconomics Macroeconomics |
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Describe microeconomics |
Smaller economic decision we have control of. Such as Supply and demand Cost benefit analysis |
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Describe macroeconomics |
Large scale decisions that affect us, but we have no control of. Such as GDP, inflation, interest rates. |
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What are the goals of finance management? |
Maximize profit, maximize earnings per share, balance between financiando business risk. |
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If common stock goes up, who benefits? |
Stockholder |
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Anther term for stock holder |
Shareholder |
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Why is timing of increased earnings important? |
Must consider present value of future earnings. |
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Describe business risk |
Risk imposed by business environment. Such as a competitor |
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Describe financial risk |
Risk imposed by manner in which firm is financed. Ex: taking a loan, issuing bonds |
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Name the four basic forms of business ownership |
Sole proprietorship Partnership Corporation LLC |
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Describe sole proprietorship |
Single owner Soley liable Can be sued for personal assets *cannot use fringe benefits as a business expense |
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Describe partnership |
Two or more owners All partners share in profits and losses Decision making is difficult Taxed at individual rate |
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Describe corporation |
Exists independently from owner Personal assets cannot be seized Capital can be raised in Corp name Advantage of llc Taxed at corporate rate |
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Describe LLC |
Taxed at individual rate- no dbl tax Advantage of LLC for owners |
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Corporate tax carry-back and Carry forward |
Taxes can be amended to go back three years and forward fifteen years to offset taxable income. |
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Name the four elements of accounting |
Financial accounting Tax accounting Management accounting Cost accounting |
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Describe financial accounting |
Present fairly the financial position of the company to stockholders |
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Describe tax accounting |
Minimize tax liability |
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Describe managerial accounting |
Collect, report, and interpret financial information needed to make decisions |
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Describe cost accounting |
Identify and assign costs. |
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What is the balance sheet? |
A snapshot of the organizations financial position at a point in time. Also, a stick statement of assets liabilities and equities at a point in time |
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What are the three parts of a balance sheet? |
Assets, liabilities, and equities |
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Accounting formula |
A=L+E |
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What are assets? |
Resources t h at can be turned into dollar. Such as building and accounts receivable. |
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What are liabilities? |
Claims of various sort such as? Rent and loans |
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What is equity? |
Value of a company after a company's sells all such as stocks. |
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Another term for asets |
Total business resources |
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Another term for liabilities |
Creditors claims |
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Another term for equities |
Owners claims |
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What are current asets? |
Assets that can be converted into cash within a year. Highly liquid such as account receivable and inventories |
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What are fixed assets in balance sheet? |
Highly illiquid Property, plant, equipment. |
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What are long term liabilities in balance sheet |
Long term debt owed to banks or creditors |
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What are the current liabilities in a balance sheet |
Debts that can be paid in one year |
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What are the equities in the balance sheet? |
Owners interest in the company represented in shares of stock. Prefers stock and common stock and retained earnings. |
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What are retained earnings in balance sheet? |
Reinvested earnings |
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What is the financial statement? |
Explains the results of operations for a period of time |
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What are components of the income statement? |
Current and retained earnings Sales figures Cost of goods sold Depreciation Selling and administrative expenses Operating profit Other income Interest and expense account Deducting interest expense |
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Four major categories of ratios |
Profitability Liquidity Operating efficiency Capital structure |
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What are ratios |
A set of statistics used to analyze trends. |
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Why do we analyze financial statements |
Understand financial data Make informed decisions |
