BUS 101 Final Exam (Chapters 9, 17-20, and D, and Lecture Notes)-FINNIN
five standards for a useful form of money
1. Portability 2. Divisibility 3. Stability 4. Durability 5. Uniqueness
Materials Requirement Planning (MRP)
A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place.
loan
A debt evidenced by a "note," which specifies the principal amount, interest rate and date of repayment
commercial bank
A financial institution that accepts demand deposits and makes loans and provides other services for the public
Statement of Cash Flows
A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time.
ledger
A group of accounts
Program Evaluation and Review Technique (PERT)
A method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project.
Banker's Acceptance (BA)
A money market instrument used to finance international and domestic trade. A banker's acceptance is a check drawn on a bank by an importer or exporter of goods and represents the bank's conditional promise to pay the face amount of the note at maturity (normally less than three months).
index fund
A mutual fund that was designed to reduce fees by investing in the stocks and bonds that make up an index
Enterprise Resource Planning (ERP)
A newer version of Materials Requirement Planning (MRP), that 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.
Credit Union
A nonprofit financial institution that is owned by its members and organized for their benefit.
credit union
A nonprofit financial institution that is owned by its members and organized for their benefit.
Bull Market
A period of increased stock trading and rising stock prices
Statistical Quality Control
A process used to continually monitor all phases of the production process.
letter of credit
A promise by the bank to pay the seller a given amount if certain conditions are met.
stockbroker
A registered representative who works as a market intermediary to buy and sell securities for clients.
sinking fund
A reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond.
Certificate of Deposit (CD)
A savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return.
preferred stock
A special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.
World Bank
A specialized agency of the United Nations that makes loans to countries for economic development, trade promotion, and debt consolidation. Its formal name is the International Bank for Reconstruction and Development.
Operations Management
A specialized area in management that converts or transforms resources (including human resources) into goods and services.
bear market
A steady drop in the stock market over a period of time
Statement of Cash Flows
A summary of the cash receipts and cash payments for a specific period of time, such as a month or a year.
Accounts Payable
Amounts to be paid in the future for goods or services already acquired
capital account
An account used to summarize the owner's equity in a business.
retained earnings
An amount earned by a corporation and not yet distributed to stockholders.
Malcolm Baldrige National Quality Award
An award established by the U.S. Department of Commerce given annually to companies that excel in either manufacturing, services, small businesses, nonprofit, education, and healthcare.
smart card
An electronic funds transfer tool that is a combination credit card, debit card, phone card, driver's license card, and more.
Steps in the Accounting Cycle
Analyze, Record, Transfer, Trial Prepare, Analyze Again
Treasury Bonds
Bonds issued by the federal government, sometimes referred to as government bonds.
debenture bonds
Bonds that are unsecured (i.e., not backed by any collateral such as equipment).
diversification
Buying several different investment alternatives to spread the risk of investing.
operating expenses
Costs involved in operating a business, such as rent, utilities, and salaries.
Debt vs. Equity Financing
Debt is borrowing with promise to eventually pay back, Equity is giving ownership away
stock certificate
Evidence of stock ownership that specifies the name of the company, the number of shares it represents, and the type of stock being issued.
financial managers
Examine financial data and recommend strategies for improving financial performance. They are responsible for paying bills,
general expenses
Expenses incurred that are not related to marketing the company's products
selling expenses
Expenses that are incurred directly in the selling of merchandise.
Yankee bonds
Foreign bonds sold in the US
Short-term Loans Payable
Formal, interest-bearing loans that are expected to be paid back within one year.
by using depositor's funds as input to invest in interest bearing loans
How do commercial banks make a profit?
environment
ISO 14001 is a system that manages a firm's impact on the
standards
ISO is a worldwide nongovernmental federation of national _________________ bodies
ISO 9001
ISO standard related to Quality management
just in time inventory
Inventory system in which companies manufacture or purchase goods just in time for use.
institutional investors
Large organizations - such as pension funds, mutual funds, and insurance companies - that invest their own funds or the funds of others
intangible assets
Long-term assets that have no physical form but do have value such as patents, trademarks, and goodwill.
M-3
M-2 plus big deposits like institutional money market funds
capital expenditures
Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights.
Dow Jones Industrial Average
Measure of average of stock prices of major industries
M-1
Money that can be accessed quickly and easily (coins and paper money, checks, traveler's checks, etc.)
venture capital
Money that is invested in new or emerging companies that are perceived as having great profit potential
Managerial Accounting
Provides information and analysis to managers inside the organization to assist them in decision making.
circuit breakers
Restrictions on trading when stock prices or a stock index reaches a specified threshold level.
SEC
Securities and Exchange Commission, an independent federal agency that oversees the exchange of securities to protect investors
Commercial Paper (CP)
Short- term (and usually unsecured) promissory notes issues by large corporations. $100,000 or less, due in 270 days or less
Notes Payable
Short-term or long-term liabilities that a business promises to repay by a certain date.
falling dollar value
The amount of goods and services you can buy with a dollar decreases.
rising dollar value
The amount of goods and services you can buy with a dollar increases.
maturity date of a bond
The date on which the borrower must pay the principal amount to the bondholder
discount rate
The interest rate on the loans that the Fed makes to banks
capital gains
The positive difference between the purchase price of a stock and its sale price.
Statistical Process Control (SPC)
The process of testing statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards.
Return on Sales (ROS)
The ratio of net income to total sales. Tells whether the firm is doing as well as its competitors.
Accounting Cycle
The series of accounting activities included in recording financial information for a fiscal period
time deposit
The technical name for a savings account; the bank can require prior notice before the owner withdraws money from a time deposit.
Operating (Master) Budget
Ties together all the firm's other budgets and summarizes its proposed financial activities.
Equity
____ financing does not involve borrowing money
thousands of events over many months
a PERT network can be made up of
cash budget
a budget that estimates cash inflows and outflows during a particular period like a month or a quarter
bond
a corporate certificate indicating that a person has lent money to a firm (or a government)
Electronic Funds Transfer (EFT)
a disbursement system that uses wire, telephone, or computer to transfer cash from one location to another
savings and loan association
a financial institution that specializes in lending money to buy homes
investment banker
a financial specialist who underwrites and distributes new securities and advises corporate clients about raising new funds
equity financing
a firm selling membership in the company in the form of stock is called
Markets
a key to company growth is providing goods and services to developing
fixed position layout
a layout that brings all resources required to create the product to a central location
process layout
a layout that organizes the transformation process into departments that group related processes
revolving credit agreement
a line of credit that's guaranteed but usually comes with a fee
stock exchange
a market for buying and selling stock
over the counter market
a network of dealers who buy and sell the stocks of corporations that are not listed on a securities exchange
financial control
a process in which a firm periodically compares its actual revenues, costs, and expenses with its budget
continuous process
a production process in which long production runs turn out finished goods over time
intermittent process
a production process in which the production run is short and the machines are changed frequently to make different products
promissory note
a promise to pay a specified amount on demand or at a certain time
term-loan agreement
a promissory note that requires the borrower to repay the loan in specified installments
Six Sigma Quality
a quality measure that allows only 3.4 defects per million opportunities
market order
a request to buy or sell a stock at the current market value
Trial Balance
a summary of all the financial data in the account ledgers that ensures the figures are correct and balanced
financial statement
a summary of all the financial transactions that have occurred over a particular period
statistical process control
a system in which management collects and analyzes information about the production process to pinpoint quality problems in the production system
pension fund
a type of mutual fund that holds assets in order to provide retirement income to its members
annual report
a yearly statement of financial condition
government and not-for-profit accounting
accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget
money supply
all the money available in the United States economy
2/10, net 30
allows a 2 percent discount off the face value of the invoice if the invoice is paid within 10 days, with a maximum of 30 days to pay it off
quick ratio
also known as acid test, measures cash, marketable securities, and receivables of a firm, in comparison to its current liabilities
private accountant
an accountant who works for a single firm, government agency, or nonprofit organization
stock splits
an action by a company that gives stockholders two or more shares of stock for each one they own
Payroll Debit Cards
an efficient way for some firms to pay their workers and an alternative to cash for those who don't qualify for a credit or debit card
independent audit
an evaluation and unbiased opinion about the accuracy of a company's financial statements
International Monetary Fund (IMF)
an international organization that acts as a lender of last resort, providing loans to troubled nations, and also works to promote trade through financial cooperation
fixed assets
assets that are relatively permanent, such as land, buildings, and equipment
Gannt Chart
bar graph showing production managers what projects are being worked on and what stage they are in at any given time
callable bonds
bonds that the issuing company can redeem (buy back) at a stated dollar amount prior to maturity
capital budget
budget for major capital, or investment, expenditures. major assets
will experience growth
by providing needed goods and services to developing markets a company
par value stock
capital stock that has been assigned a value per share in the corporate charter
current assets
cash and other assets expected to be exchanged for cash or consumed within a year
Financing
cash raised by taking on new debt, or equity capital or cash used to pay business expenses, past debts, or company dividends
operations
cash transactions associated with running the business
investments
cash used in or provided by the firm's investment activities
quality
consistently producing what the customer wants while reducing errors before and after delivery to the customer
$1000
corporate bonds are usually issued in units of
Inventory Turnover Ratio
cost of goods sold/average inventory. measures the speed with which inventory moves through the firm
bond interest
coupon rate is also known as
Liabilities
debts that you owe
FASB
defines generally accepted accounting principles
margin call
demand by a broker that investors pay back loans made for stocks purchased on margin
flexible manufacturing
designing machines to do multiple tasks so that they can produce a variety of products
measures the amount of profit earned for each share of outstanding common stock
diluted earnings per share
As owners, stockholders (usually only holders of common stock) have the right to vote for the company's board of directors. (Typically, one vote is granted for each share of stock.) Issuing new shares of stock can thus alter the control of the firm. Dividends are paid from profit after taxes and are not tax-deductible. The need to keep stockholders happy can affect managers' decisions.
disadvantages of issuing stock
no
do nonbanks accept deposits?
prospectus
document issued to possible buyers of a stocks and bonds outlining the financial condition of the company issuing those securities
Dividends
earnings distributed to stockholders
assets
economic resources owned by a firm
over-the-counter market (OTC)
electronic marketplace for securities not listed on organized exchanges such as the NYSE
Operations Management
ensuring productions are delivered on time, on budget, and to specification is the role of who?
land, labor, capital, entrepreneurship, knowledge
example of inputs
goods, services, ideas
examples of outputs
planning, routing, scheduling, dispatching, follow-up
examples of production control
principal
face value of a bond
NASDAQ
first electronic stock market
character, capacity, capital, collateral, conditions
five c's of credit
(1) the board of governors; (2) the Federal Open Market Committee (FOMC); (3) 12 Federal Reserve banks; (4) three advisory councils; and (5) the member banks of the system.
five parts of the federal reserve system
long-term forecast
forecast that predicts revenues, costs, and expenses for a period longer than 1 year, and sometimes as far as 5 or 10 years into the future
short-term forecast
forecast that predicts revenues, costs, and expenses for a period of one year or less
Cash flow forecast
forecast that predicts the cash inflows and outflows in future periods, usually months or quarters
mutual fund
fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets
equity financing
funds provided by the owners of a company. Can be sale of stock, reinvesting earnings, and venture capital
debt financing
funds raised through various forms of borrowing that must be repaid
Financial Accounting
generates financial statements and reports for interested people outside an organization
program trading
giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses
The securities act of 1933
helps protect investors by requiring full disclosure of financial information by firms selling bonds or stock
finance
includes preparing budgets, doing cash flow analysis, and planning for the expenditure of funds on assets
financial transactions
including buying and selling goods
revenue
incoming money
no
is factoring a loan?
US government bond
issued by the federal government; considered the safest type of bond investment
long-term liabilities
liabilities owed for more than a year
unsecured loan
loan guaranteed only by a promise to repay it
secured loans
loans backed by collateral that the bank can claim if the borrowers do not repay them
Bonds Payable
long-term liabilities that represent money lent to the firm that must be paid back
penny stocks
low-priced stocks of small companies that have no track record
debt and equity financing, loans
major sources of long term financing
Financial Planning
making sure you have short and long term money available for the company to use.
modular layout
many companies are moving from an assembly line layout to a
factor
market intermediary that agrees to buy the company's accounts receivable
debt to owners' equity ratio
measures the degree to which the company is financed by borrowed funds that it must repay
M-2
money included in M-1 plus money that may take a little more time to obtain (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.)
undercapitalization, poor cash flow
most common ways firms fail financially
inexpensive resources
one reason for moving production facilities
3 sections of cash flow statement
operating, investing, financing
Accounting
planning, recording, analyzing, and interpreting financial information
new
primary markets handle the sale of ___ securities
public provides services to for a fee to a variety of companies
private vs public accountant
process changes materials
process manufacturing vs assembly processes?
Pension Funds and Government Retirement Funds
provide retirement income in the form of annuities to employees who are covered by a pension plan
Budgeting
quantitative planning through which managers decide how to allocate available money to best accomplish company goals
critical path
related tasks that take the longest to complete
Balance Sheet
reports financial condition on a specific date
review and evaluate standards used to prepare a company's financial statements
role of an auditor?
mortgage bonds
secured bonds are sometimes called
margin rates
set by the board of governors of the Federal Reserve System in the U.S. market
stocks
shares of ownership in a company
exchange traded fund
shares traded on securities markets that represent the legal right of ownership over part of a basket of individual stock certificates or other securities
Treasury Bills (T-Bills)
short-term debt obligations the U.S. government sells to raise money
income statement
shows profit after cost, expense, and taxes
investment bankers
specialists who assist in the issue and sale of new securities
preferred stock
stock that entitles the holder to a fixed dividend, whose payment takes priority over that of common-stock dividends.
growth stocks
stocks in corporations that reinvest their profits into the business so that it can grow
income stocks
stocks that have a consistent history of paying high dividends
Income Statement
summarizes revenues, cost of goods sold, and expenses (including taxes) for a specific period and highlights the total profit or loss the firm experienced during that period.
Depreciation
systematic write-off of the cost of a tangible asset over its estimated useful life.
mass customization
tailoring products to meet the needs of individual customers
municipal bonds
tax-exempt bonds issued by state and local governments
demand deposit
technical name for a checking account
quantitative easing (QE)
technique used by the Federal Reserve to keep interest rates low and encourage banks to take on more loans to stimulate the economy. Also includes the production of of extra money when the economy is suffering
process manufacturing
that part of the production process that physically or chemically changes materials
assembly process
that part of the production process that puts together components
retained earnings
the accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends
Owner's Equity
the amount remaining after the value of all liabilities is subtracted from the value of all assets
ratio analysis
the assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements
open market operations
the buying and selling of government securities to alter the supply of money
Cost of Goods Sold (COGS)
the cost of the merchandise inventory that the business has sold to customers
production
the creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge
production
the creation of goods and services
cash flow
the difference between cash going in and cash going out of a business
Liquidity
the ease with which an asset can be converted into the economy's medium of exchange
Initial Public Offering (IPO)
the first time a company issues stock that may be bought by the general public
purchasing
the function in a firm that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for goods and services
Federal Deposit Insurance Corporation (FDIC)
the government agency that insures customer deposits if a bank fails
Financial Management
the job of managing a firm's resources so it can meet its goals and objectives
Auditing
the job of reviewing and evaluating the information used to prepare a company's financial statements
line of credit
the maximum amount of money a creditor will allow a credit user to borrow
discount rate
the minimum interest rate set by the Federal Reserve for lending to other banks.
common stock
the most basic form of ownership, including voting rights on major issues, in a company
bottom line
the net income (or perhaps net loss) the firm incurred from revenue minus sales returns, costs, expenses, and taxes over a period of time
Savings Association Insurance Fund (SAIF)
the part of the FDIC that insures holders of accounts in savings and loan associations
reserve requirement
the percentage of deposits that banking institutions must hold in reserve
facility layout
the physical arrangement of resources (including people) in the production process
trade credit
the practice of buying goods and services now and paying for them later
double-entry bookkeeping
the practice of writing every business transaction in two places
risk-return trade-off
the principle that the greater the risk a lender takes in making a loan, the higher the interest rate required
facility location
the process of selecting a geographic location for a company's operations
Factoring
the process of selling accounts receivable for cash
assembly
the process that puts together parts
lean manufacturing
the production of goods using less of everything compared to mass production
Current Ratio
the ratio of a firm's current assets to its current liabilities
bookkeeping
the recording of business transactions
board of governers
the seven-member board that oversees the Federal Reserve System
Blue Chip Stock
the stock of a large, well-established and financially sound company that has operated for many years
production management
the term used to describe all the activities managers do to help their firms create goods
Stockholders' Equity
the value of what stockholders own
Form Utility
the value producers add to materials in the creation of finished goods and services
to build and deliver products in response to demand, provide good quality, and provide at the lowest possible cost
three basic requirements of production
1.) forecasting the firm's financial needs 2.) developing budgets 3.) establishing financial controls
three steps of the financial planning process?
reserve requirement, open market operations, and discount rate
three tools the federal reserve uses
capital, cash, and operating/master
three types of budgets
common and preferred
two classes of stock a company can distribute
Treasury Notes (T-Notes)
type of government bond issued with shorter maturities than T-bonds
production
using factors such as land labor and capital to create goods and services is referred to as
assets
what are economic resources owned by a firm?
pockets of unemployment
what can geographic shifts in production lead to?
all changes in the firms cash that ave occurred from operations
what do accountants analyze?
the amount of profit a company earned per each share of outstanding stock
what do basic earnings per share help determine?
how effectively a firm's managers are using its various resources to achieve profits
what do profitability (performance) ratios measure?
an ERP system
what does JIT require for planning?
inventory management, quality control, production scheduling, and follow up services.
what does operations management include?
form utility and value
what does the production process add to materials?
income statement
what financial statement shows the firms profit after costs, expenses, and taxes?
manufacturing
what has production historically meant?
manufacturing and service sector companies
what kind of firms use operations managers
They provide for an orderly retirement (repayment) of a bond issue. They reduce the risk the bond will not be repaid. They support the market price of the bond because they reduce the risk the bond will not be repaid.
what makes sinking funds attractive?
need to inspect required more people, scrapping and correcting the product was costly, and dissatisfied customers may take their business elsewhere
what problems arose when holding quality control at the end of the production line?
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.
what steps are used in PERT?
NASDAQ
what was the world's first electronic stock market?
Technology
what, toward the end of the 20th, changed and simplified the accounting process?
financial controls
when a form compares its revenues to its expenses
curbs
when a key computer is turned off and program trading is halted (called curbs in)
flexible manufacturing
when machines are programmed to perform multiple tasks in order to produce a variety of products, a firm is said to be employing what?
1792
when was the NYSE founded?
day to day needs, salaries, credit operations, acquiring inventory, making capital expenditures
why does a firm need funds?
because earnings help stimulate the firm's growth and provide for stockholders' dividends.
why is EPS described as a revealing ratio?
telecommuting
working from home via computer
ISO
worldwide federation of national standards for more than 170 countries
