BA 101 Midterm #2

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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


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