BUA 100 Midterm

What is the definition of a business' vision?

A statement by management on how they will win customers in the future

Define marginal benefit

Benefit of producing the next unit of product

Define marginal cost

Cost of producing the next unit of product

What does COGS stand for? What does it mean?

Cost of sales - direct costs attributable to producing or providing the goods sold by a company (includes material and labor costs)

Financial reports are mandatory and must follow...

GAAP - generally accepted accounting principles

What question does the income statement provide an answer for?

How well did the company perform during the year

What are the 4 types of capital that business requires?

Human, physical, information, and financial

A performance objective is

Is any goal related to any area of a business

What are the 3 basic types of business? What do they do?

Manufacturer - makes things Retailer - sells things to a customer Reseller - a distributer/wholesaler; middleman

What is the "bottom line"

Net income (or loss) for the period (i.e. month, quarter, fiscal year)

How is gross profit/gross margin calculated?:

Subtracting the cost from the price or (sales - COGS)

In business, what is meant by the "mission"?

The current purpose of the business

Span of control refers to

The number of people reporting to one manager

What question does the balance sheet provide an answer for?

What is the company's financial position at year end

Assets = ? What financial statement is this related to?

assets = liabilities + owner's equity Balance sheet

financing cash flow activities

borrowing and repayment of borrowed funds; equity transactions such as issuing stock, paying dividends, and repurchase of company stock

operating cash flow activities

cash flows from selling goods and providing services to customers

investing cash flow activities

cash flows from the purchase and sale of LONG-TERM assets

Profit ____: a) is one of the main goals and responsibilities of management b) occurs when income exceeds expenses c) is necessary to sustain the business d) all of the above

d) all of the above

current liabilities

debts payable in the next year

long term liabilities

debts payable more than one year

What does EBIT stand for?

earnings before interest and taxes

current assets are those that are:

expected to be converted to cash, sold, or consumed in the next year

What are the two types of accounting?

financial and managerial

operating profit = ?

gross profit - SG&A

What question does the statement of cash flows provide an answer for?

how much cash did the company generate and spend during the year?

Define interest income and interest expense

income - earned on investments (positive) expense - cost to finance the business (negative)

What financial statement is also called the statement of operations?

income statement

What financial statement shows the "bottom line"?

income statement

What financial statement shows the "top line"?

income statement

What type of business is Whitman Chocolates?

manufacturer

Revenues - expenses = ? What financial statement is this related to?

net income (or loss) income statement

Current liabilities must be repaid in how long a time period?

one year or less

the statement of cash flows categorizes cash transactions into 3 types of activities:

operating investing financing

Increase/decrease in cash = ? What financial statement is this related to?

operating cash flows +/- investing cash flows +/- financing cash flows = increase/decrease in cash Statement of cash flows

What is SG&A?

operating expenses other than Cost of Sales (COGS)

What is the primary function of managerial accounting?

provides info for internal users (i.e. managers); includes: budgets, forecasts, etc. doesn't need to follow GAAP

assets represent

resources that the business owns or controls

top line refers to?

revenues (sales)

net income refers to

revenues - expenses

The income statement reports 2 main categories:

revenues and gains expenses and losses

What is comparative advantage?

the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity

The term marketing channel refers to:

the distributors and retailers who carry a firm's products

the balance sheet is also referred to as:

the statement of financial position

Pure competition arises when

there are many buyers and many sellers

what is the primary function of financial accounting?

to provide info to external users (i.e. investors, govt, the public)

Net sales = ?

total sales less returns and allowances

long term assets are those that:

will be held longer than one year