BA 101 Midterm #2
what are the steps used in PERT?
1 analyzing and sequencing tasks that need to be done, 2 estimating the time needed to complete each task, 3 drawing a PERT network illustrating the information from steps 1 and 2, and 4 identifying the critical path.
a long-terms forecast's time period is generally more than:
1 year
short-term forecasts generally cover up to a:
1 year
What are the three steps to the financial planning process
1. forecasting the firm's short-term and long-term financial needs, 2. developing budgets to meet those needs, 3. establishing financial controls to see whether the company is achieving its goals
The acronym for using computers to design products is referred to as
CAD
the three main types of budgets in financial management include:
Capital, cash, and operating budgets
newer version of MRP, combines the computerized functions of all the divisions and subsidiaries of the firm—such as finance, human resources, and order fulfillment—into a single integrated software program that uses a single database. The result is shorter time between orders and payment, less staff needed to do ordering and order processing, reduced inventories, and better customer service.
Enterprise resource planning (ERP)
why has the world bank been subject to criticism
Environmentalists charge that it finances projects damaging to the ecosystem. Human rights activists and unionists say the bank supports countries that restrict religious freedoms and tolerate sweatshops.
As the video showed, there are many people who are so concerned about the viability of banks, and indeed the entire financial system, that they are buying gold and silver coins instead of trusting their money to banks. However, the government provides protection from having bank accounts wiped out as they were during the Great Depression. The _____________ is an independent agency of the U.S. government that insures bank deposits (up to $250,000).
Federal Deposit Insurance Corp
defines the generally accepted accounting principles that accountants must follow.
GAAP
upports organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget.
Government and not-for-profit accounting
a collection of the best practices for managing an organization's impact on the environment
ISO 14001
the common name given to quality management and assurance standards. not part of the government, but is a federation of national______ bodies
ISO 9001, standards
long-term assets that have no physical form but do have value.10 Patents, trademarks, copyrights, and goodwill are intangible assets.
Intangible assets
was established to foster cooperative monetary policies that stabilize the exchange of one national currency for another.
International Monetary Fund (IMF)
Which is a benefit of telecommuting?
Less dependence on locating near sources of labor, firms may choose less expensive locations, and employees are in touch with company and customers right from home
includes coins and paper bills, money that's available by writing checks (demand deposits and share drafts), and money held in traveler's checks—that is, money that can be accessed quickly and easily
M1
includes everything in M-l plus money in savings accounts, and money in money market accounts, mutual funds, certificates of deposit, and the like—that is, money that may take a little more time to obtain than coins and paper bills.
M2
is M-2 plus big deposits like institutional money market funds.
M3
a computer-based operations management system that uses sales forecasts to make sure needed parts and materials are available at the right time and place.
Materials requirement planning (MRP)
Are computers used in the manufacturing of products when CAD is employed ?
No
must ensure products are manufactured and delivered on time, on budget, and to specifications.
Operations managers
T/F: Computer aided design was united with computer-aied manufacturing to bring computer-integrated manufacturing to the business world
True
T/F: facility layout depends greatly on the processes that are to be preformed
True
Selling stock to the public to obtain funds is by no means easy or automatic. U.S. companies can issue stock for public purchase only if they meet requirements set by the:
U.S. Securities and Exchange Commission (SEC) and various state agencies
what are three of the most common reasons a firm fails financially ?
Undercapitalization (insufficient funds to start the business). Poor control over cash flow. Inadequate expense control.
what identifies the investment of the sole proprietor in businesses that are not incorporated?
a capital account
A single integrated software system
a unique element of ERP is that it combines computerized functions of all divisions into one database supported by:
Stockholders are entitled to
a vote for the board of directors
the recording, classifying, summarizing, and interpreting of financial events and transactions in an organization to provide management and other interested parties the financial information they need to make good decisions about its operation
accounting
if financial management is the heartbeat of competitive businesses, what keeps the heartbeat stable?
accounting information
items to consider when setting a long-term interest rate include:
adequacy of collateral, the firm's credit rating, and the general level of market interest rates.
a cash flow forecast is concerned with
all cash inflows and outflows
a yearly statement of the financial condition, progress, and expectations of an organization.
annual report
items on a firms cash budget include
anticipate borrowing needs, debt repayment, operating expenses, and short-term investments, and is often the last budget prepared
Which of the following are benefits of renter pride resources planning
any department can see the status of an order at any time, shorter time between orders and payment, an less staff is required to process orders
putting together components is the ____________ process
assembly
workers do only a few tasks at a time
assembly-line layout
Reviewing and evaluating the information used to prepare a company's financial statements is referred to as
auditing
the inventory turnover ratio is the cost of goods divided by the
average inventory
An unsecured bond, called a debenture bond
backed only by the reputation of the issuer.
the direct trading of goods or services for other goods or services
barter
A firm that puts out an offer of an IOU with a promise to repay the amount borrowed, with interest, on a certain date has issued a
bond
debt financing is essentially
borrowing money
Financial transactions include:
buying and selling goods and services, acquiring insurance, paying employees, and using supplies. Usually we group all purchases together, and all sales transactions together.
If the Fed wants to increase the money supply, it ________ government bonds back from individuals, corporations, or organizations that are willing to sell
buys
forecasts a firm's spending plans for major asset purchases that often require large sums of money, like property, buildings, and equipment.
capital budget
estimates cash inflows and outflows during a particular period, like a month or a quarter. It helps managers anticipate borrowing needs, debt repayment, operating expenses, and short-term investments, and is often the last budget prepared
cash budget
A ________ _________ forecast is part of a short-term forecast to predict monies coming in and going out of a firm
cash flow
a time-deposit (savings) account that earns interest, to be delivered on the certificate's maturity date.
certificate of deposit
An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA) and meets the state's requirement for education and experience is recognized as a
certified public accountant (CPA)
the check __________ function of the federal reserve enables bank to settle demand deposits between member banks
clearing
the federal reserve banks serve as the national ___________ for checks
clearinghouses
organizations that are becoming more involved in lending include:
commercial credit companies and brokerage firms
an accountants time is freed up to do more important tasks such as financial analysis due to the assistance provided by using
computerized accounting programs
in order to be a quality organization, a firm must
consistently produce what the customer wants
long production runs turn out finished goods over time.
continuous process
The main idea behind mass production is to produce a large number of limited variety of products at a very low _________
cost
the rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders (stockholders or venture capitalists)
cost of capital
measures the cost of merchandise the firm sells or the cost of raw materials and supplies it used in producing items for resale
cost of goods sold
International Monetary Fund (IMF) and world bank provide loans to
countries
advantages of using retained earnings for financing include all BUT:
creation of new jobs due to tax reasons
are nonprofit, member-owned financial cooperatives that offer the full variety of banking services to their members—interest-bearing checking accounts at relatively high rates, short-term loans at relatively low rates, financial counseling, life insurance policies, and a limited number of home mortgage loans.
credit union
he sequence of tasks that takes the longest time to complete. We use the word critical because a delay anywhere along this path will cause the project or production run to be late.
critical path
are items that can or will be converted into cash within one year. They include cash, accounts receivable, and inventory.
current assets
a way to send transactions directly from one computer to another from one computer to another instead of using a paper check is
debit cards and electronic funds transfer (EFT)
When the federal reserve wants to encourage economic activity, it will_____________ the discount rate
decrease
The video discusses the fear that we are in danger of inflation or even hyperinflation since the Fed is putting so much money into the economy. Suppose the Fed decided to take large amounts of money out of the economy. What could happen then?
deflation
a credit made directly to a checking or savings account in place of a paycheck
direct deposit
the interest rate the Fed charges for loans to member banks
discount rate
The practice of writing every transaction in two places is
double-entry bookkeeping
what are the three profitability performance ratios
earnings per share (EPS), return on sales, and return on equity.
money raised from within the firm, from operations or through the sale of ownership in the firm (stock
equity financing
As nonprofit institutions, credit unions enjoy an exemption from_______________________.
federal income taxes
In the U.S., the organization that buys and sells foreign currencies, regulates various types of credit, supervises banks, and collects data on the money supply and other economic activity is the
federal reserve
The types of organizations that can issue bonds include
federal, state, and local governments; federal government agencies; foreign governments; and corporations.
the function in a business that acquires funds for the firm and manages them within the firm.
finance
what type of information is reported by accounting to stakeholders?
financial
a process in which a firm periodically compares its actual revenues, costs, and expenses with its budget.
financial control
examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm.
financial managers
a summary of all the financial transactions that have occurred over a particular period
financial statement
The balance sheet, income statement, and statement of cash flow are the
financial statements
Which of the following is an advantage related to conducting quality control throughout production instead of at the end of the production line?
finding defects prior to completion saves expensive resources
designing machines to do multiple tasks so they can produce a variety of products
flexible manufacturing
imp is not a primary lending source, but they do make funds available :
for countries in financial difficulty
The value added to inputs during the creation of a product is called
form utility
what does the production process add to materials
form utility and value
Allowing banks and nonbanks to offer similar services has:
given the consumer a greater variety of services and offered more banking services through one provider
questions asked and answered in a long-term forecast do not include which of the following?
how should employees be scheduled?
The financial statement that shows a firm's bottom line—that is, its profit (or loss) after costs, expenses, and taxes—is the
income statement
firms will leverage because it will
increase a firm's rate of return on ownerships investment
As competition between banks and nonbanks has __________________, the dividing line between them has become less apparent.
increased
when a firm decides on a bond term, and repayment date, the ____________ is being prepared
indenture
In a bond agreement, the terms of the bond such as, interest and repayment date are called the
indenture terms
an evaluation and unbiased opinion about the accuracy of a company's financial statements.
independent audit
Commercial banks offer a variety of services to
individuals and corporations in need of a loan
because of ____________ ___________ more flexibility in choice of business location has increased while allowing firms to remain competitive
information technology
choosing facility location has become more flexible for both companies and employees through the use of ________________ _______________ such as texting, teleconferencing, cell phones, and email.
information technology
on a balance sheet assests may include
intangible/tangible resources
bonds have to be paid back plus
interest
the production run is short (one or two eggs) and the producer adjusts machines frequently to make different products (like the oven in a bakery or the toaster in a diner).
intermittent process
What services are provided by nonbanks?
investment services, accept loan applications, and brokerage services
keep a minimum of inventory on the premises—and deliver parts, supplies, and other needs just in time to go on the assembly line.
just in time inventory control
when the federal reserve increases the discount rate, it will tend to make banks borrow ______ from the fed.
less
nonbanks include:
life insurance companies, pension funds, brokerage firms, commercial finance companies, and corporate financial services.
what are the main types of financial ratios used in ratio analysis?
liquidity, activity, profitability, and debt
_________ __________ forecasts will look at all major inflows and outflows of the firm for a period of more than a year
long-term
provides information and analysis to managers inside the organization to assist them in decision making.
managerial accounting
which means tailoring products to meet the needs of a large number of individual customers, is now practiced widely
mass customization
which teams of workers combine to produce more complex units of the final product
modular layout
In the past, objects as diverse as salt, feathers, fur pelts, stones, rare shells, tea, and horses have served as
money
What are examples of the M2 (money supply)?
money market accounts, certificates of deposit, and savings account
The amount of money the Federal Reserve makes available for people to buy goods and services is called the
money supply
Due to problems in the 1980's, rules were changed to make S&L's ________ like commercial banks
more
the 'bottom line' is
net income or loss after taxes and the last line on the income statement
gross profit:
net sales - cost of goods sold
are financial organizations that accept no deposits but offer many of the services provided by regular banks.
nonbanks
the M-3 money supply includes
only M-2 and institutional money market funds
consist of the buying and selling of government bonds
open market operations
an aggregate of the firm's other budgets and summarizes its proposed financial activities. More formally, it is presented to all the company's managers and estimates the costs and expenses needed to run the business, given all projected revenues. The firm's spending on supplies, travel, rent, technology, advertising, and salaries is determined in the operating budget, generally the most detailed budget a firm prepares
operating (or masters) budget
________ is a specialized area in management that converts or transforms resources (including human resources) into goods and services.
operations management
the major activities shown on the statement of cash flows include
operations, investments, and financing
the financial crisis has made many small businesses look for
other sources of funds
A term-loan agreement Is a promissory note that requires the borrower to
pay specified amount in installments and pay interest on a loan
monies put aside by corporations, nonprofit organizations, or unions to help fund their members' financial needs when they retire.
pension funds
nonbank entities that influence the financial economy as much as banks do include:
pension funds, brokerage firms, and life insurance companies
when account recieveable are _______, they are used as collateral for a loan. the lender advances a percentage of the value to the borrowing firm and collects from the firm as customers pay their bills.
pledged
During the recent financial collapse, financial managers failed to do their jobs effectively because of:
poor investment decisions and risky financial decisions
ways modern banking practices have made the banking system less secure include:
poor security of electronic data and putting more information in cyberspace
similar equipment and functions are grouped together. The order in which the product visits a function depends on the design of the item.
process layout
An assembly line or product layout is used in production when
producing large quantities of a few types of products
measure how effectively a firm's managers are using its various resources to achieve profits.
profitability
companies sometimes spend millions to move location
proximity to customers
the red cross is a non profit, which would most likely require the services of which type of professional to prepare its financial services?
public or private accountant
is the function that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for quality goods and services
purchasing
improving ________ means reducing defects before delivery of the product to the customer
quality
in the past, conducting inspections at the end of the production line was the approach to
quality control
items that can be financed by being collateral in a secured loan include:
real estate, raw materials, and automobiles
Source documents would include items such as
receipts, travel records, etc.
RFID (radio frequency identification) cards:
record transactions and locations
banks that contributed to the real estate collapse often did not look at a customers ability to _________ loans
repay
a percentage of commercial banks' checking and savings accounts they must keep in the bank (as cash in the vault) or in a non-interest-bearing deposit at the local Federal Reserve district bank
reserve requirement
lean manufacturing aims to produce more high quality goods while decreasing the _____________ needed.
resources
accumulated earnings from the firm's profitable operations that are reinvested in the business and not paid out to stockholders in distributions of company profits.
retained earnings
profits the company keeps and reinvests in the firm and the most favored source of meeting long term capital needs are called
retained earnings
indirectly measures risk by telling us how much a firm earned for each dollar invested by its owners
return on equity
what is the term for all resources that come into the firm from operating activities?
revenue
which of the following would be shown on an income statement
revenue, operating expenses, and net income
The greater the risk a lender takes in making a loan, the higher the rate of interest.
risk/return trade-off
Scrutiny of the accounting industry intensified, however, and resulted in the U.S. Congress's passage of the
sarbanes-oxley
is a financial institution that accepts both savings and checking deposits, and provides home mortgage loans
savings and loan association
which of the following are quality of life issues that must be considered by companies when choosing a facility location?
schools, climate, and crime
issued with some form of collateral, such as real estate, equipment, or other pledged assets.
secured bond
backed by collateral, something valuable such as property.
secured loan
A firm that has placed an asset into a loan contract, agreeing to give the bank possession if the loan is defaulted, has applied for a _________ loan by offering ____________.
secured, collateral
operating expenses can be classified into
selling and general expenses
developing countries are providing new parkers for companies that can provide them with needed:
servies, technology, and goods
which of the following are inputs to the accounting system
shipping/sales documents
not-for-profit organizations need accounting professionals to
show their money is being spent properly, show their donors that their money is being spent, show that their funds are well-managed
the process some managers use to continually monitor all phases of the production process and ensure quality is being built into the product from the beginning
six sigma quality control
is an electronic funds transfer tool that combines a credit card, debit card, phone card, driver's license card, and more.
smart card
which are advantages of using computers to maintain and compile accounting information?
speed, handle large amounts of data
reports cash receipts and cash disbursements related to the three major activities of a firm:
statement of cash flows
in a public corporation, the ownership is held by
stockholders
trained in tax law and is responsible for preparing tax returns, or developing tax strategies.
tax accountant
working from home via computer, is a major trend in business.
telecommuting
promissory note that requires the borrower to repay the loan with interest in specified monthly or annual installments
term-loan agreement
Correct statements about pledging include:
the firm gets a percentage of the pledged accounts reciveable as a loan and a firms accounts receivable are used as basis for loan
the differences between the world bank and the imf include the fact that:
the imp is more for international currency policies
Which of the following is NOT a factor in settling interest rate?
the time of the year
the production process is part of the
the transformation process
What is correct concerning credit unions?
they are nonprofit organizations, they are member-owned, and they are tax-exempt organizations
the imp and world bank can create a strong influence on a government
through its use of loans and financial policies
A savings account is technically a ___________________ because the bank can require a prior notice before you make a withdrawal
time deposit
moving products quickly and at the lowest possible cost to customers in order to remain competitive is down as
time-to-market
top U.S. retail banks allow customers to access their accounts online so they can:
transfer funds, pay bills, and check account balances
T/F: Quality control inspections were historically conducted at the end of the production line
true
T/F: shareholders are owners of an organization
true
T/F: a budget is a tool for financial planning
true- budgets involve money
If a sole proprietor is found negligent of an action, then that person could face
unlimited liability
a ___________ is more difficult to obtain because it doesn't require any collateral
unsecured loan
money invested in new or emerging companies that some investors
venture capital
By providing needed goods and services to developing markets a company:
will experience growth
The bank primarily responsible for financing economic development is the International Bank for Reconstruction and Development,
world bank
disadvantages of bartering include the fact that
you have to carry around the goods that are hard to transport and your items of value may have a limited life