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18 Cards in this Set

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Accounting
process of measuring, interpreting, and communicating financial information to support internal and external business decision making
Accounting process
the procedure by which accountants convert data about individual transactions to financial statements
GAAP
generally accepted accounting principles. these encompass the conventiones, rules, and procedures for determining acceptable accounting practices at a particular time
FASB
financial accounting standards board. primarily responsible for evaluating, setting, or modifying GAAP.
Fundamental accounting equation
assets = liabilities + owner's equity
Income statement
financial record of a company's revenues, expenses, and profits over a period of time
Statement of cash flows
provides investors and creditors with relevant information about a firm's cash receipts and cash payments for it's operations, investments, and financing during an accounting period.
Liquidity ratios
a firm's ability to meet its short-term obligations when they must be paid is measured by its liquidity ratio
current and quick (liquidity) ratios
current ratio compares current assets to current liabilities, giving managers information about the firm's ability to pay its current debts as they mature. the quick ratio measures the ability of a firm to meet its debt payments on short notice
Budget
a planning and controlling tool that reflects the firm's expected sales revenues, operating expenses, and cash receipts and outlays
Ratio analysis
a tool for measuring a firm's liquidity, profitability, and reliance on debt financing as well as the effectiveness of management's resource utilization.
Finance
business function of planning, obtaining, and managing a company's funds in order to accomplish its objectives effectively and efficiently
Risk-return tradeoff
optimal balance between the expected payoff from an investment and the investment's risk
Financial plan
document that specifies the funds a firm will need for a period of time, the timing of inflows and outflows, and the most appropriate sources and uses of funds
Money
anything generally accepted as payment for goods and services
Debt capital
represents funds obtained through borrowing
Equity capital
consists of funds provided by the firm's owners when they reinvest earnings, make additional contributions, liquidate assets, issue stock to the general public, or raise capital from venture capitalists and other investors
Monetary policy
using interest rates and other tools to control the supply of money and credit in the economy