Business Foundations Test 4

Front 1

Accounting

Back 1

the recording, measurement, and interpretation of financial information, often used in making business decisions

Front 2

GAAP

Back 2

generally accepted accounting principles

Front 3

SEC

Back 3

securities and exchange commission provides oversight

Front 4

Certified Public Accountant (CPA)

Back 4

an independent professional who provides accounting services to the public (individuals or firms) for a fee

Front 5

Private Accountant

Back 5

an accountant employed by a corporation, government agency, or other organization

Front 6

Forensic Accounting

Back 6

analyzing financial data in search of fraudulent entries or financial misconduct

Front 7

Accounting Equation

Back 7

Assets = Liabilities + Owners Equity

Front 8

Double-Entry Bookkeeping

Back 8

a system of recording and classifying business transactions in separate accounts in order to maintain the balance of the accounting equation

Front 9

Managerial Accounting

Back 9

internal use of accounting statements by managers in planing and directing organizational activities

Front 10

Cash Flow

Back 10

the movement of money through an organization, is management's greatest concern

Front 11

Income Statement

Back 11

financial report that shows an organization's overall profitability or loss over a period of time

(expenses-revenues)

Front 12

Revenue

Back 12

total amount of money received or promised from the sale of goods and services and other activities

Front 13

Cost of Goods Sold

Back 13

the amount of money the firm spent to buy and produce the products it sold

Front 14

Gross Income/Profit

Back 14

revenues-cost of goods sold

Front 15

Expenses

Back 15

the cost incurred in day-to-day operations of an organization

Front 16

Depreciation

Back 16

a special type of expense included in general and administrative category

Front 17

Net Income

Back 17

total profit or loss after all expenses are deducted from revenue

Front 18

Balance Sheet

Back 18

a "snapshot" of an organization's financial position at a given moment

accumulation of all the company's transactions since it began

Front 19

Current Assets

Back 19

used or converted to cash within a calender year

Front 20

Accounts Receivable

Back 20

money owed to the company by clients or customers who have promised to pay at a later date

Front 21

Long-Term Assets

Back 21

represent a commitment of funds for more than one year

Front 22

Current Liabilities

Back 22

obligations to short-term creditors

Front 23

Accounts Payable

Back 23

amounts owed to suppliers for goods and services purchased on credit

Front 24

Accrued Expenses

Back 24

all unpaid financial obligations incurred by the company

Front 25

Types of Liabilities

Back 25

Current Liabilities
Accounts Payable
Accrued Expenses

Front 26

Ration Analysis

Back 26

calculations that measure an organization's financial health

Front 27

Profitable Rations

Back 27

Profit Margin=Net Income/Sales

Return on Assets=Net Income/Assets

Return on Equity=Net Income/Equity

Front 28

Money

Back 28

anything generally accepted in exchange for goods and services

Front 29

Store of Value

Back 29

means of retaining and accumulating wealth

Front 30

Measure of Value

Back 30

single standard for assigning and comparing values of products and resources

Front 31

Medium of Exchange

Back 31

accepted as payment for products and resources

Front 32

Bartering

Back 32

trading one good or service for another of similar value

Front 33

Characteristics of Money

Back 33

Acceptability
Divisibility
Portability
Stability
Durability
Difficulty to Counterfeit

Front 34

Checking Account

Back 34

money stored in an account at a bank that can be withdrawn without advance notice

Front 35

Savings Account

Back 35

accounts with funds that usually cannot be withdrawn without advance notice

Front 36

Money Market Account

Back 36

higher interest rates than standard bank rates with greater restrictions

Front 37

Certificates of Deposit

Back 37

savings accounts that guarantee a set interest rate over a period of time providing funds are not withdrawn before maturity

Front 38

Credit Cards

Back 38

means of access to pre-approved lines of credit granted by a bank or finance company

Front 39

Federal Reserve Board

Back 39

Fed

guardian of the American financial system
independent agency of the federal government
established in 1913 to regulate the nation's banking and financial industry

Front 40

Four major functions of the Fed

Back 40

1. controls the money supply with monetary policy
2. regulates financial institutions
3. manages regional and national check-clearing procedures
4. supervises the federal deposit insurance of commercial banks in the Federal Reserve system

Front 41

Commercial Banks

Back 41

largest and oldest of all financial institutions, relying mainly on checking and savings accounts

Front 42

Savings and Loan Associations

Back 42

primarily offer savings accounts and make long-term loans for residential mortgages

Front 43

Credit Unions

Back 43

financial institutions owned and controlled by depositors usually having a common employer, profession, trade group, or religion

Front 44

Mutual Savings Banks

Back 44

similar to the S&Ls but owned by depositors

Front 45

Optimizing Inventory

Back 45

objective is to minimize firm's investment in inventory without experiencing productions cutbacks

radio frequency identification technology helps firms track and optimize their inventories

Front 46

Prime Rate

Back 46

the interest rate that commercial banks charge their best customers for short-term loans

Front 47

Line of Credit

Back 47

an arrangement by which a bank agrees to lend a specified amount of money to an organization upon request

Front 48

Junk Bonds

Back 48

special type of high interest rate bond that carries higher inherent risks

Front 49

What kind of market is the stock exchange? Why?

Back 49

Secondary

New York stock exchange is involved

Front 50

Preferred Stock

Back 50

gives the stockholder preference in distribution of profits, but not voting and control rights

Front 51

Common Stock

Back 51

most important source of capital for most new companies

Front 52

Par Value

Back 52

amount printed on the stock certificate

Front 53

Market Value

Back 53

price at which the stock is trading

Front 54

Capital in Excess of Par

Back 54

difference between market value and par value

Front 55

Securities Market

Back 55

provide the mechanism for buying and selling securities

Front 56

Stock Market

Back 56

dramatic shifts in structure of exchange

Front 57

Over-the-Counter Market (OTC)

Back 57

network of dealers all over the country and world