Business unit 6
Return on capital is
a measure of how well a business generates cash flow in relation to the capital it has already invested in itself.
accrual accounting method
a method of accounting that records transactions at the time they occur even if no money changes hands at the time
The cash conversion cycle of working capital management is
a ratio that refers to the number of days between a company's paying for raw materials and receiving cash from selling the products made from those raw materials
accounting system
the methods and procedures used in consistently handling the business's financial information.
Accounting
the process of keeping and interpreting financial records.
Finance is
the process of obtaining funds and using them to achieve the goals of the business
A company's current balance of assets and liabilities falls under the focus of
working capital management.
Decisions about financing refer to the
Acquisition of funds
The cash conversion cycle should be
As short as possible
The finance function is usually responsible for which of the following processes:
Budgeting
Which of the following is a key component of managing working capital:
CCC
When return on capital is positive, the company is
Growing in value
Which of the following is a capital investment decision:
How to finance investments
How does the finance function relate to company spending?
It plans and controls spending.
Finance is distinct from Accounting because its main focus is on all of the following EXCEPT
Record keeping
Accounting is distinct from finance because its main focus is on
Record keeping activities
The goals of the finance function are to ensure profitability and to
Reduce risks
Which of the following is a measure of how well a business generates cash flow:
Return on capital
Managerial accounting
a type of accounting that involves preparing and reporting financial data to internal users who need financial information to control day-to-day operations and to make financial decisions and plans affecting the business
Money the business owes is known as
accounts payable
Money owed to the business is known as
accounts receivable.
Cash accounting
an accounting method in which income and expenditures are recorded at the time the money changes hands.
Cash accounting is used to
reduce and eliminate costs in a business. It is used to determine the price for a product or service that will allow earning of a reasonable profit.
Determining which projects a business should invest in is known as
capital budgeting
Capital investment decisions are
decisions that determine which projects a business will invest in, how the investment(s) will be financed, and whether or not to pay dividends to shareholders.
Assets a company already owns and can use to finance a new venture are called
equity
The finance function ensures that the company's financial goals are
in line with organizational priorities.
To keep communication flowing with other departments, the finance function depends on
information systems
Working capital management is
management of a firm's current balance of assets and liabilities; involves accounts payable and receivable, inventory and cash.
Finance is the business function that involves managing
money
The finance function would definitely be involved in a decision regarding
new business projects and strategies