Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
149 Cards in this Set
- Front
- Back
|
cash to cash cycle
|
the time that is required for a bsiness to acquire resources
|
|
|
operating cycle
|
same as cash to cash cycle
|
|
|
payables
|
amounts owed to vendors for merchendise or services purchased on credit
|
|
|
receivables
|
amounts that are owed to a business for merchendise that was sold on credit
|
|
|
money
|
an accepted medium of exchange
|
|
|
profit
|
the amount that revenues exceed expenses
|
|
|
cash
|
money that is immediately available to be spent
|
|
|
cash equivalents
|
assets that may be quickly converted to cash
|
|
|
currency
|
the bills and coins printed by gov's to represent money
|
|
|
demand deposits
|
money held in checking and savings accounts
|
|
|
marketable securities
|
stocks and bonds that are traded on an open market
|
|
|
commercial paper
|
nots issues by credit-worthy corporations
|
|
|
short-term debt
|
any debt that must be paid in less than one year from the date of the financial statement on which it is reported
|
|
|
bearer
|
any person or business entity who possesses a security
|
|
|
company book balance
|
the sum of cash inflows and cash outflows recorded in the firm's accounting records
|
|
|
bank ledger balance
|
the sum of deposits and withdrawals recorded in a bank's accounting records
|
|
|
bank available balance
|
the sum of the money that has actually been received and paid out of a depositor's account
|
|
|
clearinghouse
|
an entity that processes checks and electronic fund transfers for banks and other financial orgs
|
|
|
overdraft
|
a negative balance in a depositor's bank account
|
|
|
float
|
delays in the movement of money among depositors and banks
|
|
|
reconciling
|
an accounting process that identifies the causes of all differences between book and bank balances
|
|
|
nonsufficient funds
|
a situation that occurs when a check is returned to a depositor becasue the writer of the check did not have a bank available balance equal to or greather than the amount of the check
|
|
|
charge back
|
a reduction in the bank account of a merchant by a credit card company
|
|
|
cash budget
|
identifies when
|
|
|
cash receipts budget
|
a schedule of the amounts and timings of the receipt of cash into a business
|
|
|
cash disbursements budget
|
a schedule of the amounts and timings of payments of cash out of a business
|
|
|
comprehensive budget
|
aka master budget
|
|
|
DEPOSITS AND PROGRESS PAYMENTS-
|
cash payments received before product is completed or delivered
|
|
|
DISCOUNTS FOR PROMPT PAYMENT-
|
a reduction in sales price provided to credit customers for paying outstanding amounts in a timely manner
|
|
|
NONCORE PROJECTS-
|
revenue producing tasks and activities related to
|
|
|
FACTORING RECEIVABLES-
|
borrowing money secured by a firm’s accounts receivable
|
|
|
TRADE DISCOUNTS-
|
percentage discounts from gross invoice amounts provided to encourage prompt payment
|
|
|
NONCASH INCENTIVES-
|
rewards that do not require payment of cash
|
|
|
CONSIGNMENT-
|
the practice of accepting goods for resale
|
|
|
BARTER-
|
the practice of trading goods and services without the use of money
|
|
|
TIMING PURCHASES-
|
a method of controlling the timing of cash outflows that is invisible to suppliers and vendors
|
|
|
GAMING THE PAYMENT PROCESS-
|
using methods to appear to be paying bills on time
|
|
|
GROWTH TRAP-
|
a financial crisis that is caused by a business growing faster than it can be financed
|
|
|
less than 20% of businesses experience money probs indicating the importance and effectiveness of these businesses (t/f)
|
FALSE
|
|
|
time required for a business to aquire resources, convert them into product, and receive cash from the sale is called conversion cycle (t/f)
|
FALSE
|
|
|
the bills and coins printed by gov is considered cash equivilents (t/f)
|
FALSE
|
|
|
money that is immediately available to be spent is considered cash (t/f)
|
TRUE
|
|
|
the rule of thumb for trade discounts is that you should always capture 5%+ if the billing period is less than 30 days (t/f)
|
FALSE
|
|
|
__ OF SMALL BUSINESSES EXPERIENCE MONEY PROBLEMS
|
ALMOST 2/3
|
|
|
___ are amounts owed to vendors for merchendise or services purchased on credit
|
PAYABLES
|
|
|
___ are the two purposes of money
|
to make exchanges
to keep track of wealth |
|
|
assets that may be quickly converted to cash
|
CASH EQUIVILENT
|
|
|
money held in checking and savings accounts
|
DEMAND DEPOSITS
|
|
|
for a small business, cash can come from all of these sources EXCEPT:
cash flow from... investing subsidy operating financing |
CASH FLOW FROM SUBSIDY
|
|
|
an entity that processes checks and electronic fund transfers for banks and other financial orgs
|
CLEARING HOUSE
|
|
|
the sum of cash inflows and cash outflows recorded in the firms accounting records
|
company book balance
|
|
|
the sum of money that has actually been received and paid out of a depositor's account
|
bank available balance
|
|
|
2 primary causes of a float:
|
AVAILABILITY FLOAT and
PROCESSING FLOAT |
|
|
info the bank does not know about your account that you do know
|
the deposits you have made after bank closing
|
|
|
the key budget is the ___ budget
|
cash
|
|
|
__identifies when, how, and why cash is expected to come into the business
|
CASH BUDGET
|
|
|
refers to cash payments received before product is completed or delivered
|
deposits and progress payments
|
|
|
___ refers to revenue producing tasks and activities related to but not part of the primary strategy of a business
|
NONCORE PROJECTS
|
|
|
practice of trading goods and services w/o the use of money
|
BARTERING
|
|
|
3 primary causes of cash flow problems:
|
difficulty collecting money due from customers
seasonal variation in sales unexpected decreases in sales |
|
|
55% of small businesses that fail do so because of ____, not b/c of lack of profitability
|
cash flow probs w/ an immediate impact
|
|
|
cash flow mgmt is a prob b/c its hard to match ___ with ____
|
timing of the receipt of cash
timing of need to expend cash |
|
|
cash flow from operations
|
cash from selling prods/servs and collecting cash
|
|
|
cash flow from investing
|
cash obtained from stocks, bonds, land, buildings, or equipment
|
|
|
cash flow from financing
|
cash donated to the business in return for ownership or money borrowed from other entities
|
|
|
2 factors of cash outflows that must be controlled:
|
the ammount of cash being paid out
the timing of cash being paid out |
|
|
3 most common for handling money shortages in order:
|
1. use personal money
2. borrow 3. adjust scheduled purchases |
|
|
profit (is/is not) money
|
is not
|
|
|
cash is composed of 3 forms of money:
|
currency
demand deposits travelers checks |
|
|
cash equivilents: (3)
|
marketable securities
commercial paper debt investments that mature in less than 3 months |
|
|
most common form of cash:
|
currency
|
|
|
2nd most common:
|
demand deposits
|
|
|
demand deposits include:(3)
|
checking accounts
savings accounts travelers checks |
|
|
marketable securites:
|
stocks and bonds for chich there is an active auction market
|
|
|
5 techniques to even out cash flows:
|
taking deposits and progress payments
offering dicounts for prmpt payment asking for your money taking on noncore paying projects factoring receivables |
|
|
managerial accounting
|
accounting methods that are specifically intended to be used by managers for planning, directing, and controlling a business
|
|
|
tax accounting
|
an accounting approach based on specific accounting requirements set by gov taxing agencies
|
|
|
financial accounting
|
formal, rule based set of accounting principles and procedures intended for use by outside owners, investors, banks, and regulators
|
|
|
business entity concept-
|
business has an existence seperate from that of its owners
|
|
|
going concern
|
accounting concept that a business is expected to continue in existence for the foreseeable future
|
|
|
accounting equation
|
assets = liabilities + owners equity
|
|
|
liabilities
|
legal obligations to give up things of value in the future
|
|
|
owners equity
|
difference between assets and liabilities of a business
|
|
|
bankrupt
|
financial state of having more debt than assets, such that net worth is negative
|
|
|
opportunity cost
|
value of an economic activity or event that is foregone in order to be able to undertake a different, specific activity or event
|
|
|
cost
|
value given up to obtain something you want
|
|
|
expense
|
decrease in owners equity caused by consuming your product or service
|
|
|
MACRS rate
|
IRS ACRONYM FOR THE modified accelerated cost recovery system- LETS TAXPAYERS DEPRECIATE MORE OF THE COST EARLIER IN THE LIFE OF A CAPITAL EXPENSE
|
|
|
depreciation
|
regular and systematic reduction in income that transfers asset value to expense over time
|
|
|
financial statements
|
formal summaries of the content of an accounting systems records of transactions
|
|
|
retained earnings
|
sum of all profits and losses, less all dividends paid since the beginning of the business
|
|
|
articulate
|
the concept that information flows from the income statement through the statements of retained earnings and owners equity to the balance sheet
|
|
|
income statement
|
lists revenues and expenses
shows amount of profit a business makes for a specified period of time |
|
|
balance sheet
|
statement of what a business owns (assets), what it owes (liabilities), and how much value the owners have invested in it (equity)
|
|
|
liquidity
|
measure of how quickly a company can raise money thru internal sources by converting assets to cash
|
|
|
current ratio
|
value of current assets divided by current liabilities
|
|
|
financial flexibility
|
business's ability to manage cash flows in such a manner that the compnay can respond appropriately to unexpected opportunities and needs
|
|
|
financial strength
|
the ability of a business to survivie adverse financial events
|
|
|
cash flow statement
|
statement of sources and uses of cash in a businesss for a specific period of time
|
|
|
GAAP
|
generally accepted accountingm princicples
standardized rules for accounting procedures set out b y the financial account standards board and used in all audits and submissions of accounting reports to the gov |
|
|
operating activities
|
activities involved in producing and selling goods & services
|
|
|
investing activities
|
purchase and sale of land, buildings, equipment, and securities
|
|
|
financing activities
|
activities thru which cash is obtained from and paid to lenders, owners, and investers
|
|
|
external (cost) factors
|
aspects of the world outside the business which could cause the business's cost to change
|
|
|
internal (cost) factors
|
aspects of or choices within the business which could cause the business's costs to change
|
|
|
cost volume profit analysis
|
a managerial accounting technique which looks at the fixed and variable costs of a business to arrive at a number of unit sales (volume) to maximize profits
|
|
|
variable costs
|
those costs that change with each unit produced (like raw materials)
|
|
|
fixed costs
|
costs that remain constant regardless of quantity of output
like rent |
|
|
economy of scale
|
idea that its cheaper (per item) to make many of an item than few
|
|
|
breakeven point
|
when total costs = gross revenue
|
|
|
pro forma
|
latin for IN THE FORM OF
when used to describe financial statements, indicates estimated or hypothetical info |
|
|
budget
|
financial plan for the future, based on a single level of operations
a quantitiative expression of the use of resources necessary to achieve a business's strategic goals |
|
|
master budget
|
aka COMPREHENSIVE BUDGET
consists of sets of budgets that detail all prjectec receipts and spending for the budgeted period |
|
|
costs of goods sold budget
|
schedule that shows the predicted cost of product actually sold during the accounting period
|
|
|
activity based cost estimates
|
accounting method which assigns costs based on the differentt types of work a business does in order to sell a particular product or service
|
|
|
variance
|
difference between an actual and budgeted revenue or cost
|
|
|
variance analysis
|
process of determining the effect of price and uqantity changes on revenues and expenses
|
|
|
favorable/unfavorable variance
|
label applied to variances to indicate their effect upon the income statement
|
|
|
favorable variances result in
|
profits being greater than vudgeted, all other things equal
|
|
|
unfavorable variances result in...
|
profits being less than budgeted, all other things equal
|
|
|
one reason why accounting is im portant to a small business is it shows how much your business is worth (t/f)
|
TRUE
|
|
|
The primary reason to acquire and use a computerized accounting system in your business is to ensure the accuracy of your accounting information. (t/f)
|
TRUE
|
|
|
The final output of a computer accounting system is a set of financial statements and reports. (T/F)
|
TRUE
|
|
|
Net income is the most used item on the income statement(T/F)
|
FALSE
|
|
|
most common ratio used to estimate liquidity is the debt-to-total assets ratio.(T/F)
|
FALSE
|
|
|
It is becoming more common for managers to use activity-based cost estimates for overhead.(T/F)
|
TRUE
|
|
|
Which of these is NOT a reason why accounting is important to a small business?
|
It makes it difficult for others to acquire your business
|
|
|
Which of these is NOT one of the most commonly used small business accounting systems?
|
TAXCUT
|
|
|
__are the 2 formats for income statements:
|
Single-step and multi-step format
|
|
|
The Statement of Financial Position is also called the
|
balance sheet
|
|
|
Which of these is NOT a limitation of a balance sheet?
|
It does not reflect the current profitability of the business
|
|
|
To prepare a ________ budget is the first step in preparing a master budget
|
SALES
|
|
|
______ refers to the process of determining the effect of price and quantity changes on revenues and expenses.
|
VARIANCE ANALYSIS
|
|
|
We need all of these EXCEPT ______ to make good decisions.
A) certainty situation B) efficient ways to condense information so it is understandable C) methods to help compare alternatives D) good information |
CERTAINTY SITUATION
|
|
|
Analyses are based on the concept that a dollar to be received right now has more utility than does a dollar to be received at some time in the future are called ______ analyses.
|
NPV
|
|
|
3 types of accounting:
|
managerial
tax financial |
|
|
2 reasons to do accounting:
|
to produce info that is useful to you for managing your business
to meet legal or contractual requirements |
|
|
main reason to use computerized accounting system:
|
ensure accuracy
|
|
|
specific accounting needs are determined by: (2)
|
industry your in
size of your business |
|
|
5 financial reports:
|
income stmnt
stmnt of retained earnings stmsnt of owners equity balance sheet cash flow stmnt |
|
|
__ is the primary source of info about a business's profitability
|
income statement
|
|
|
balance sheet
|
snap shot of financial holdings and liabilities at the close of business on a specific date
|
|
|
direct statement of cash flows
|
developed solely from the cash records of the business and does not make any reconciliation to income statement
|
|
|
indirect statement of cash flows
|
starts with net income and adjusts the accruals and deferrals to provide cash flow info that can easily be reconciled to the other financial statements
|
|
|
most used managerial accounting technique-
|
cost volume profit analysis
|
|
|
most common model used for small businesses planning
|
familiar business plan
|
|
|
business planning
|
simple process of applying your knowledge of your business to make estimates of future operations and results
|
|
|
questions to understand effects of price changes:
|
what would i have paid for the amount i acutally used, if the price had been what i expected??
how much material should i have used to make the number of units that were actually completed? |
|
|
5 primary functions in a business
|
planning
organizing staffing directing controlling INPUT FOR DECISION MAKING when combined |
