Pr Admin Exam 2

Front 1

projection of the detailed income and expenses that we estimate will occur in a future period, usually prepared on a month-to-month basis for up to a year

Back 1

budget

Front 2

dept that manages the company’s financial resources

Back 2

finance

Front 3

dept in charge of recording and reporting all its financial transactions

Back 3

accounting

Front 4

the job title of the executive who is in overall charge of all the financial department activities in all large companies and most mid-sized ones.

Back 4

chief financial officer

Front 5

things finance dept. might oversee (5)

Back 5

o Insurance
o Risk management
o Contract administration and pricing
o Internal auditing
o Investor relations

Front 6

set of rules, conventions, standards, and procedures established by the Financial Accounting Standards Board for reporting financial information

Back 6

Generally Accepted Accounting Principles

Front 7

ARTistic Financial Reports stands for

Back 7

accurate
relevant
timely

Front 8

metaphor for accounting

Back 8

DVR..Accounting Transaction Recorder (ATR)

Front 9

a systematic listing of all ledger account names and associated numbers used by a company, arranged in the order in which they normally appear in financial statements—customarily assets, liabilities, owners’ equity or stockholders’ equity, revenue, and expenses

Back 9

Chart of accounts

Front 10

A file that has all the recorded transactions of the company; data source for most basic financial statements that companies produce

Back 10

general ledger

Front 11

financial reports should be ARTistic...standing for:

Back 11

accurate
relevant
timely

Front 12

metaphor for balance sheet

Back 12

DVR/Accounting Transaction Recorder (ATR)

Front 13

a systematic listing of all ledger account names and associated numbers used by a company, arranged in the order in which they normally appear in financial statements—customarily assets, liabilities, owners’ equity or stockholders’ equity, revenue, and expenses

Back 13

chart of accounts

Front 14

A file that has all the recorded transactions of the company; data source for most basic financial statements that companies produce

Back 14

general ledger

Front 15

the calculated amount of total assets of a company that would theoretically remain if all the assets were sold off and all the liabilities paid off. It is typically composed of the total amount invested in the company by its owners plus the accumulated profits of the business since inception.

Back 15

stockholders' equity

Front 16

total assets minus total liabilities =

Back 16

stockholders' equity

Front 17

type of accounting when transaction recorded only when cash changes hands

Back 17

cash accounting

Front 18

type of accounting when transactions are recorded when an economic event (ex. Sales) is deemed to have occurred

Back 18

accrual accounting

Front 19

an itemized statement that summarizes the assets and the liabilities of a business as of a given date, usually the end of a month, a quarter, or a year

Back 19

balance sheet

Front 20

an accounting of revenue, expenses, and profit for a given accounting period, usually a month, quarter, or a year; recaps all activities of a company intended to produce a profit

Back 20

income statement

Front 21

a report that shows the effect of all transactions that involved or influenced cash but didn’t appear on the income statement

Back 21

statement of cash flow

Front 22

assets that are cash or are expected to become cash in the next 12 months

Back 22

current assets

Front 23

cash equivalents (3)

Back 23

petty cash funds
checking accounts
cash reserves (savings accounts, bank certificates, money market accounts, short-term investments)

Front 24

amounts due from customers as a result of sales made on credit or trade accounts

Back 24

accounts receivable

Front 25

current assets (5)

Back 25

cash and cash equivalents
accounts receivable
allowance for bad debts
inventory
prepaid expenses

Front 26

a reserve - estimated amount provided for possibility that a balance will not be paid at all

Back 26

allowance for bad debts

Front 27

production materials, purchased products or manufactured products

Back 27

inventory

Front 28

part of inventory

on the balance sheet, amount paid to suppliers

whatever the company uses in manufacturing process before it begins to change them into something else

Back 28

raw materials

Front 29

part of inventory

not yet finished products

includes raw material costs and labor related costs

Back 29

work in process

Front 30

part of inventory

ready for sale

includes labor and related overhead costs, factory rent, supervision, and product inspection

Back 30

finished goods

Front 31

amounts that are paid in advance to a vendor or creditor for goods and services

create cash by enabling the company to avoid paying out that amount during the next 12 months (will write a check for 12 months of amount and then pay 1/12 of that each month, creating a current asset)

Back 31

prepaid expenses

Front 32

examples of prepaid expenses

Back 32

property tax
insurance
income tax installments

Front 33

assets that are used for extended periods of time, usually years

Back 33

fixed assets

Front 34

all debts of the company that are expected to be paid within the next 12 months

Back 34

current liabilities

Front 35

account that includes all bills yet unpaid from all suppliers and service providers

Back 35

accounts payable

Front 36

a common way to measure the amount of ready liquidity of a company

current assets minus current liabilities

Back 36

working capital

Front 37

the ability to put more money into a business than has been invested by its owners and thus earn more than its invested capital could earn alone

Back 37

leverage

Front 38

amount earned by employees but not yet paid to them

Back 38

accrued payroll

Front 39

clauses in a loan agreement that require the borrower to do certain things ("affirmative") and/or not do others ("negative")

Back 39

covenants

Front 40

current liabilities (5)

Back 40

accounts payable
accrued payroll
other accrued liabilities
notes payable and other bank debt
current portion of long-term debt

Front 41

debts of the company that are expected to be paid after the next 12 months

Back 41

long-term liabilities

Front 42

long-term liabilities (4)

Back 42

lease contracts
long-term debt
loans from stockholders
ownership (equity)

Front 43

amount paid into the company by investors to purchase stock (nominal amount per share)

Back 43

capital stock

Front 44

the amount paid into the company by investors to purchase stock beyond the par value (balance of proceeds from capital stock)

Back 44

contributed capital

Front 45

profits of a business that have not beed paid out to the owners or stockholders as dividends as of the balance sheet date

are reinvested in the business

Back 45

retained earnings

Front 46

sale of products and goods that the company ______ offers for sale in the ____ course of business is included in "Sales" on the income statement

Back 46

regularly

normal

Front 47

what it takes to earn the sale
(delivering, packaging, making the product, sales commissions, etc.)

Back 47

cost of sales

Front 48

the gain the company earns after selling its products and paying for all elements of the cost of sales

Back 48

gross profit

Front 49

costs of what it takes to keep the doors open and support sales

Back 49

operating expenses

Front 50

operating expenses (3)

Back 50

engineering or R&D

sales & marketing

general and administrative expenses

Front 51

profit that comes from doing what the company is in business to do

Back 51

operating income

Front 52

EBITDA

Back 52

earnings before interest, taxes, depreciation, and amortization

Front 53

a financial measure for evaluating a company often used as an approximation of operating cash flow

Back 53

EBITDA

Front 54

income that the company expects to pay tax on

Back 54

pretax income (income before taxes)

Front 55

final financial result for company during the reporting

Back 55

net income (real bottom line)

Front 56

net income divided by number of shares held by all the owners

Back 56

earnings per share

Front 57

amount of net income (or loss) that is allocable to each share of stock

Back 57

earnings per share

Front 58

common stock earnings per share calculated as if all stock options and warrants were exercised and if all pre ferred stock and convertible bonds were converted

Back 58

earnings per share fully diluted

Front 59

relationship between a stock's price and its earnings per share

price per share divided by earnings per share for a 12-month period =

Back 59

price/earnings ratio

Front 60

the time between cash disbursement and cash collection

Back 60

cash cycle

Front 61

cash cycle

Back 61

cash-->setup-->assets-->credit-->production-->sales-->collection-->cash

Front 62

step of cash cycle

renting facilities, setting up phones and utilities

Back 62

setup

Front 63

step of cash cycle

business purchases these to start business like office supplies, computers, warehouse space, staff, etc.

Back 63

assets

Front 64

step of cash cycle

business obtains this to increase cash for the business (aka leveraging)

Back 64

credit

Front 65

step of cash cycle

manufacturing the product

Back 65

production

Front 66

step of cash cycle

businesses sell services on credit, usually give them 30 days to pay

Back 66

sales

Front 67

step of cash cycle

customer pays for product

Back 67

collection

Front 68

a method of accounting in which financial transactions are recorded only when cash is involved. Similar to keeping a checkbook, a sale is recorded only when the cash is received, and an expense is recorded only when a check is written to pay for it

Back 68

cash basis accounting

Front 69

the more common method of accounting in which financial transactions are recorded when they actually happen, even if the payment is made later. A sale on credit is recorded when the customer is invoiced, an a purchase on credit is recorded when the goods are received, even if the supplier’s bill is paid much later.

Back 69

accrual basis accounting

Front 70

4 types of transactions

Back 70

1. transactions that increase profits but don't produce cash until later

2. decrease profits but don't reduce cash until later

3. put cash in the bank but don't help profits until later -- if at lal

4. transactions that take cash but may or may not affect profits later

Front 71

The amount of expense that a company charges against earnings to write off the cost of a capital asset over the time it will benefit the company, without regard to how it was paid for and after considering age, wear, obsolescence, and salvage value

Back 71

depreciation

Front 72

kind of depreciation

if the expense is assumed to be incurred equally over the life of the asset (most common)

Back 72

straight line depreciation

Front 73

kind of depreciation

if the expense is assumed to be incurred in decreasing amounts over the life of the asset

Back 73

accelerated depreciation

Front 74

the process of spreading the cost of an intangible asset, such as research and development expenditures, over its expected useful life.

Back 74

amortization

Front 75

shortcomings of income statement (3)

Back 75

1. doesn't report on all transactions that occur in company unless they have immediate impact on profit or loss

2. doesn't explain why net profit on income statement never appears as an actual improvement to company's bank balance

3. doesn't give growing companies a tool to manage cash to finance growth

Front 76

method of presenting cash flows from operating activities

shows each major class of gross cash receipts and gross cash payments, summarizing cash outflows and inflows

Back 76

direct method

Front 77

method of presenting cash flows from operating activities

begins with net income and adjusts for changes in account balances that affect available cash

Back 77

indirect method

Front 78

three principal areas of activity for cash flow

Back 78

operations
investing
financing

Front 79

buying and selling goods and services, manufacturing, paying employees, etc.

cash flow from ____

Back 79

operations

Front 80

operating items that had an impact on cash that weren't included in the income statement

Back 80

adjustments

Front 81

first line of cash flow statement

Back 81

net income

Front 82

we ____ depreciation to net income on the cash flow statement because it was ___ in arriving at net income for the balance sheet, but depreciation is a bookkeeping entry for which no one writes a check

Back 82

add

subtracted

Front 83

if inventory increases from one year to the next, on the cash flow statement, it will be ____ because increased inventory means a _____ in cash

Back 83

subtracted

decrease

Front 84

if current portion of notes payable decreases from one year to the next, on the cash flow statement, it will be ____ because paying off a loan requires cash, meaning a ___ in cash

Back 84

subtracted

decrease

Front 85

if accounts payable increases from one year to the next, on the cash flow statement that means that it will be ____ because an increase in accounts payable means borrowed cash, or ____ in cash

Back 85

added

increase

Front 86

if capital expenditure (ex. equipment) increases from one year to the next, on the cash flow statement that means that it will be ____ because an increase in capital means _____ in cash

Back 86

subtracted

decrease

Front 87

if long-term debt increases from one year to the next, on the cash flow statement that means that it will be ____ because an increase in debt means _____ in cash

Back 87

added

increase

Front 88

if dividends paid to stockholders increases from one year to the next, on the cash flow statement that means that it will be _____ because an increase in dividend payments means ____ in cash

Back 88

subtracted

decrease

Front 89

final item on the cash flow statement

Back 89

net increase or decrease in cash

Front 90

on the cash flow statement, we ____ cash for prepaid expenses because they are paid up front

Back 90

decrease

Front 91

if accounts payable (money borrowed from someone else) increased from one year to the next, we _____ cash because that is money we borrowed for us to have

Back 91

add

Front 92

on the balance sheet, we ___ cash for prepaid expenses because it is money we have set aside for something that lasts for the entire year

Back 92

add

Front 93

on the balance sheet, we ___ cash for depreciation because there is a ___ in value of whatever is depreciated

Back 93

subtract

decrease

Front 94

if investment activities increases, we ___ cash because we paid out cash for these activities

Back 94

subtract

Front 95

a term used to describe amounts spent for all fixed assets that are not charged to expense when purchased, but are recorded on the company’s balance sheet; capitalized and then depreciated over the amount of time they are used by the business

(aka investment activities)

Back 95

capital expenditure

Front 96

when there is an increase in short-term investments, that means that the company paid money to invest in something. on the cash flow sheet, that means that we ____ short-term investments because cash ____ to purchase the investments

Back 96

subtract

decreased

Front 97

type of business plan designed to define the overall vision and mission of a business, its strategy and long-term objectives, and some of the key details that might be important to strategic reader

Back 97

strategic plan

Front 98

a detailed description of what the company will do to pursue the objectives of its strategic plan for the next period

Back 98

operating plan

Front 99

a special version of a strategic plan written for the express purpose of attracting outside financial resources to the company, usually intended for equity investors, but sometimes written for lenders as well

Back 99

financing plan

Front 100

image of the world as you define it, arranged as you would like to see it

Back 100

vision of the future

Front 101

role of the organization in achieving the vision

Back 101

mission

Front 102

long-term goals must be SMART:

Back 102

specific
maysurable
achievable
relevant
trackable

Front 103

parts of business plan (5)

Back 103

overview
production
sales and marketing
R&D
financial

Front 104

part of business plan

overall purpose of company and key goals/challenges

Back 104

overview

Front 105

part of business plan

goals of how to produce/improve a product or service

Back 105

production plan

Front 106

part of business plan

research potential customers

Back 106

sales and marketing plan

Front 107

part of business plan

identify new products to be brought into the market

Back 107

R&D plan

Front 108

part of business plan

the budget

Back 108

financial plan

Front 109

integrated, multiyear plan of income, expenses, cash flow and balance sheet changes
(tool for telling the future)

Back 109

financial plan

Front 110

less detailed, covers less time, has a special focus
(tool for telling the future)

Back 110

projection

Front 111

very short-term, test validity of operating budget
(tool for telling the future)

Back 111

forecast

Front 112

a set of projections of revenue and expenses at various levels of production

Back 112

flexible budget

Front 113

report prepared for each dept. to summarize actual revenues earned and costs incurred compared with budgeted revenues and costs. shows difference between the two.

Back 113

budget variance report

Front 114

the number and pattern of messages presented to a particular public in a given period of time

Back 114

message frequency

Front 115

the number of different people who are exposed to a single message

Back 115

message reach

Front 116

minimum of ____ exposures seems to be needed to make an impact

Back 116

three

Front 117

most audiences remember a message they have seen ___ ___ ___ ___ more than one presented ___ ___ ___ ___ ___

Back 117

daily over several days

several times in one day

Front 118

implementation schedule for strategic plan

Back 118

timeline

Front 119

common type of flow chart listing tactics and associated tasks, with indication of the time needed for each task

Back 119

Gantt chart

Front 120

common type of flow chart using circles and arrows to visually display tasks associated with a strategic plan

Back 120

PERT (Program Evaluation and Review Technique) chart

Front 121

the development of resources needed to achieve objectives

Back 121

budgeting

Front 122

items to budget for (5)

Back 122

personnel
material
media costs
equipment and facilities
administrative items

Front 123

fee structure

based on actual time amount spent on project, plus money spent on materials, production costs, and media

Back 123

hourly rate plus expenses

Front 124

fee structure

flat charges for projects; ex. $250 for news release

Back 124

project/fixed fees

Front 125

fee structure

fixed monthly base charges paid in advance for predetermined level of agency availability

Back 125

retainer fees

Front 126

fee structure

bills based on success in achieving objectives, such as placement, web hits, etc.

Back 126

performance fees

Front 127

budgeting approach

approach to budgeting based on the cost of similar activity by major competitors

Back 127

competitive parity

Front 128

budgeting approach

organization looks at how much they spent on a similar recent project and allows the same budget for this project

Back 128

same-as-before

Front 129

budgeting approach

drawn form the field of marketing, where some companies base their advertising budget on the previous year’s profits

Back 129

percentage-of-sales

Front 130

budgeting approach

based not on dollars but on prior outcomes
• Ex. For every student registered to university, university will earmark $75 for that student for PR purposes

Back 130

unit-of-sales

Front 131

budgeting approach

provides for PR funding when the organization’s financial condition is sound, but limits funding during lean times

Back 131

all-you-can-afford

Front 132

budgeting approach

identifies the cost of implementing a tactic, then compares this cost to the estimated value of the expected results

Back 132

cost-benefit analysis

Front 133

budgeting approach

examines consequences of inaction and their effect on the organization’s mission

Back 133

what-if-not-funded

Front 134

budgeting approach

approach to budgeting based on current needs rather than past expenditures
• Cost of each tactic calculated, tactic ranked by importance

Back 134

zero-based budgeting

Front 135

budgeting approach

examination of the phases of development, knowing that start-up programs generally require more financial resources than maintenance programs

Back 135

stage-of-life-cycle

Front 136

budgeting approach

based on established goals and objectives

Back 136

objective-based budgeting

Front 137

level of success required to offset the cost of the development and implementation of a strategic plan; the point beyond which profit begins accruing

Back 137

break-even point

Front 138

break-even point =

Back 138

total cost divided by value of desired outcome

Front 139

association of budgetary expenses with the number of people needed to cover the cost

Back 139

per capita cost

Front 140

per capita cost =

Back 140

total project cost divided by number of people working on project

Front 141

according to brian broderick

ways we make revenue

Back 141

hourly fees
retainer
project fees
mark-up expenses
administrative fee

Front 142

according to brian broderick

personnel expenses are the ____ expense

Back 142

greatest

Front 143

according to brian broderick

kinds of personnel expenses

Back 143

salary
benefits
training
overhead (real estate and technology)

Front 144

according to brian broderick

ways to increase revenue (5)

Back 144

billable rates
billable expectations
project prices
new products or lines of business
develop products with high margins

Front 145

according to broderick

taking off part of the bill
(bad budgeting)

Back 145

write-down

Front 146

according to broderick

taking off the bill entirely
(bankrupt)

Back 146

write-off

Front 147

according to broderick

% of billed revenue a firm actually charges its clients and is paid for

Back 147

realization

Front 148

according to broderick

% of goal that a person actually bills (standard is 90%)

Back 148

utilization

Front 149

according to broderick

margin standard

Back 149

15% to 30%

Front 150

according to broderick

difference between revenue and expenses

Back 150

margin

Front 151

any verbal or written exchange that attempts to communicate information that positions the organization favorably regarding competition or an anticipated conflict

Back 151

strategic positioning

Front 152

5 variables affecting risk perception

Back 152

- risks voluntarily taken tend to be accepted
- more complex situation = higher perception of risk
- familiarity breeds confidence
- conflicting expert messages increases risk perception
- severity of consequences affects risk perception

Front 153

- a major occurrence with a potentially negative outcome affecting the organization, company, or industry, as well as its publics, products, services, or good name

Back 153

crisis

Front 154

percent of crises that are smoldering

Back 154

86% (most crises are smoldering)

Front 155

top 3 triggers for crisis

Back 155

financial irregularities
unethical behavior
executive misconduct

Front 156

Coomb's 7 strategies for responding to crisis

Back 156

• Attack the accuser
• Denial
• Excuse
• Justification
• Ingratiation
• Corrective action
• Full apology

Front 157

____ strategies are better than ____ strategies

Back 157

accommodating
defensive

Front 158

the collective representation of an organization’s past performance that describes the firm’s ability to deliver valued outcomes to multiple stakeholders; track record

Back 158

reputation

Front 159

reputation is owned by the ____

Back 159

public

Front 160

three foundations of reputation

Back 160

economic performance
social responsiveness
ability to deliver valuable outcomes to stakeholders

Front 161

techniques to assess and monitor an organization’s reputation

Back 161

reputation audit

Front 162

takes about ___ years for organization to recover from reputation damaging crisis

Back 162

three

Front 163

five strategies for image restoration according to benoit

Back 163

denial
evade responsibility
reduce offensiveness
corrective action
mortification (profuse apology)

Front 164

reduce offensiveness strategy

refer to clean record and reputation

Back 164

bolstering

Front 165

reduce offensiveness strategy

distinguish act from other similar but more offensive acts

Back 165

differentiation

Front 166

reduce offensiveness strategy

justify by placing act in more favorable context

Back 166

transcendence