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18 Cards in this Set
- Front
- Back
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Accounting
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process of measuring, interpreting, and communicating financial information to support internal and external business decision making
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Accounting process
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the procedure by which accountants convert data about individual transactions to financial statements
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GAAP
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generally accepted accounting principles. these encompass the conventiones, rules, and procedures for determining acceptable accounting practices at a particular time
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FASB
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financial accounting standards board. primarily responsible for evaluating, setting, or modifying GAAP.
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Fundamental accounting equation
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assets = liabilities + owner's equity
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Income statement
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financial record of a company's revenues, expenses, and profits over a period of time
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Statement of cash flows
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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.
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Liquidity ratios
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a firm's ability to meet its short-term obligations when they must be paid is measured by its liquidity ratio
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current and quick (liquidity) ratios
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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
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Budget
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a planning and controlling tool that reflects the firm's expected sales revenues, operating expenses, and cash receipts and outlays
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Ratio analysis
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a tool for measuring a firm's liquidity, profitability, and reliance on debt financing as well as the effectiveness of management's resource utilization.
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Finance
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business function of planning, obtaining, and managing a company's funds in order to accomplish its objectives effectively and efficiently
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Risk-return tradeoff
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optimal balance between the expected payoff from an investment and the investment's risk
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Financial plan
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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
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Money
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anything generally accepted as payment for goods and services
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Debt capital
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represents funds obtained through borrowing
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Equity capital
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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
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Monetary policy
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using interest rates and other tools to control the supply of money and credit in the economy
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