business final review

a________ is a planning and control tool that reflects expected revenues, operating expenses, and cash receipts and outlays.

budget

no load funds are mutual funds that

do not charge sales commission

what is a company faced with when it doesn't have enough cash to meet short term needs?

liquidity crisis

the commission charged by a fund when selling the mutual funds to investors is referred to as

load

the highest amount of money a lender would provide for the purchase of a house is known as the

loan to value ratio

the sarbanes- oxley act outlaws

loans by corporations to their own executives

a company issues $50,000 in bonds to generate money for expanding its business. this money is an example of a

long term liability

prime interest rate is the

lowest rate of interest that banks charge for short-term loans

the price at which the stock is actually selling is referred to as its ___________ value.

market

the ________ requires that expenses incurred in producing revenues be deducted from the revenue they generated during the same accounting period.

matching principle

money serves as a ________ to simplify transactions between buyers and sellers.

medium of exchange

bookkeeping refers to

recording the financial activities of the business

what type of investment bank works with a specific geographic focus?

regional

companies attempt to increase the market valuation of a share by

repurchasing some of the shares through a stock buyback

________ refers to sums of money (equal to a certain percentage of their deposits) that banks are legally required to keep on hand.

reserves

a bank with major products that include personal loans, savings accounts, credit cards, and debit cards is a

retail bank

a key determinant in which type of funds to select is based on

risk tolerance

identify the legislation that prohibits investment bankers from influencing stock analysts & requires CEOs & CFOs to sign statements attesting to the accuracy of their financial statements.

sarbanes oxley act

which of the following is an internal source for obtaining funds for business?

selling assets to obtain revenue

equity financing refers to arranging funding by

selling ownership shares

a ________ budget identifies the money a new company will need to spend to launch operations.

startup

a home loan offered to a borrower with a low credit score, with loan-to-value at 80 percent, is an example of a

subprime mortgage

money serves as a ________ when it is used as a way of accumulating wealth until it is needed.

temporary store of value

which of the following federal actions has the goal of increasing the money supply in markets?

the federal reserve buys treasury bonds from the market

which of the following federal actions has the goal of reducing the money supply in markets?

the federal reserve raises the discount rate

accounts receivable refers to

the money owed to a firm by its customers

the maturity date is the date on which

the principle of a bond will be repaid in full

the annual interest rate that an issuer offers when a bond is first sold is known as the

coupon

which of the following sources of short-term debt is characterized by revolving credit terms?

credit card

________ are not-for-profit, member-owned cooperatives that offer deposit accounts and lending services to consumers and small businesses.

credit unions

short term financing is used to cover _________________ of a business.

current expenses

annual interest/closing price=

current yield

t/f: investing in bonds typically has higher risk than investing in stocks.

false

t/f: shareholders of a firm have prior claims on the firm's assets.

false

________ is the government-sponsored enterprise responsible for guaranteeing and funding home mortgages.

fannie mae

the ________ is the federal agency responsible for protecting money in customer accounts and managing the transition of assets whenever a bank fails.

federal deposit insurance corporation

the ________ is a fundamental driver of economic behavior because it influences short-term and long-term interest rates, foreign exchange rates, and inflation.

federal funds rate

which of the following refers to evaluating a company's performance & the economic implications of strategic decisions such as product pricing, employee benefits, & business acquisitions?

financial analysis

successful financial management starts with an outline of funds needed for a period of time, along with sources and intended uses of those funds, referred to as a

financial plan

when a consumer buys a house and resells it when its value rises, with the goal of making a quick, big profit, this act is referred to as

flipping

global funds are funds that invest in

foreign & us securities

____________ refers to combining accounting & investigating skills to assist in legal & criminal matters.

forensic accounting

net sales - cost of goods sold =

gross profit

a company that is highly leveraged is considered to have

high debt

________ refers to shares of ownership without voting rights but with defined dividends.

preferred stock

what type of stock minimizes risk as much as possible for the investor, but has a slower growth?

preferred stock

a put option is purchased when the buyer believes that the

price of underlying stock will decrease

________ ratio is calculated by dividing the market value per share by the dividend paid on each share of stock.

price/earnings

________ rate is the rate a bank charges its best loan customers.

prime

what type of interest rate is offered on a short term loan to a bank's best costumer?

prime

managers use a _________ to identify the costs needed to accomplish a particular goal.

project budget

t/f: a business can use short-term financing to cover current expenses. typically, short-term financing will be repaid in one year.

true

t/f: a company's price/earnings ratio is determined by dividing the market value per share by the earnings per share.

true

t/f: according to the double entry bookkeeping method, the accounting equation must be in balance.

true

t/f: equity financing refers to arranging funding by selling ownership shares in the company.

true

t/f: if the Fed decreases the reserve requirement, banks will have less money to lend.

true

t/f: inventory represents a cost while it is waiting to be sold

true

t/f: maturity date is the date on which the principle of a bond will be repaid in full.

true

t/f: money is anything generally accepted as a means of paying for goods and services.

true

t/f: money market funds are financial instruments that invest in stocks considered to be selling below their true value.

true

t/f: preferred stock owner's have no voting rights in a corporation.

true

t/f: the prime rate is the interest rate that a bank charges its most credit-worthy customers.

true

t/f: treasury notes are debt securities issued by the federal government that are repaid within 1 to 10 years after issuance.

true

money serves as a ________ when it is used to measure the value of goods and services.

unit of accounting

________ accounts represent a firm's cash on hand as well as inventory that can be converted to cash or is expected from customers, minus what it is scheduled to pay out.

working capital

a company has the following assets: fixed assets worth $30,000 & investments worth $6,000. the company's total liabilities amount to $25,000. what is the owner's equity of the company?

$11,000

a company has $20,000 cash & $100,000 worth of land. other assets of the company amount to $300,000. the firm has an outstanding loan of $200,000 and other liabilities adding up to $25,000. what is the owner's equity of the company?

$195,000

what must public accountants obtain before they are eligible to conduct a company's audit?

CPA licensing

in the money supply, what represents the cash held by the public and money deposited in checking accounts?

M1

capital structure is

a firm's mix of debt & equity financing

the purchase of a god or service that has no yet been paid for is recorded as a ____________ in the balance sheet.

accounts payable

which of the following is an example of a current asset?

accounts receivable

________ is an accounting method in which revenue is recorded when a sale is made, and an expense is recorded when it is incurred.

accrual basis

a mortgage loan that has a variable interest rate over the life of the loan is known as a ________ mortgage.

adjustable rate

________ is a statement of a firm's financial position on a particular date and is known as a statement of financial position.

balance sheet

generating a ____________ is a function of financial accounting.

balance sheet

to analyze a firm's financial strengths in terms of its overall assets and liabilities, which of the following reports is best suited to estimate this on a particular date?

balance sheet

stocks of major, well-established corporations with demonstrated ability to manage their way through every kind of economic condition are known as ________ stocks.

blue chip

what is the advantage of purchasing a corporate bond instead of stock?

bonds can provide a regular course of income

the budget created to purchase major equipment, real estate, or other expensive items is a ________ budget.

capital

what type of accounting system records revenue only when the money is actually received?

cash basis

what effect will lower interest rates have on the housing market?

consumers will be able to afford larger mortgages

in a ________, borrowers stop making payments on a loan.

default

________ stocks tend to fare better when the economy is doing worse and vice versa.

defensive

________ is an accounting procedure for systematically spreading the cost of a tangible asset over its estimated useful life.

depreciation

which of the following is a key difference between depreciation & amortization?

depreciation applies to tangible assets, whereas amortization applies to intangible assets.

which of the following is classified as accounts payable?

electricity charges

the goal of GAAP is to

enable outsiders to make confident analyses & comparisons

independent accounting firms that provide auditing services for public companies are called

external auditors

stocks that are purchased primarily for dividend payouts rather than capital gains potential are known as ________ stocks.

income

the ____________ is a financial record that represents a company's revenues, expenses, & profits over a given period of time.

income statement

which of the following reports is best suited to analyze an organization's profitability over a period of time?

income statement

the federal reserve decides to lower the discount rate offered the banks in the united states. this would

increase the money supply

which of the following is a component of a firm's working capital account?

inventory

which of the following is an example of a company's asset?

inventory in the warehouse

which of the following offers investing and advisory services to organizational customers, including governments?

investment bank

which of the following is the best example of an external source for obtaining funds for business?

issuing corporate bonds

bonds issued by states, cities, and various government agencies to fund public projects are known as ________.

municipal bonds

which of the following pools money from many investors to buy financial instruments, allowing for increased diversification?

mutual funds

the profit earned, or the loss incurred by a firm, determined by subtracting expenses & tastes from revenues, is referred to as the

net income

short term financing is financing that will typically be repaid within

one year

what type of budget is used to identify all sources of raising funds and coordinates the spending of those funds throughout the company?

operating

a ________ is the purchased right, without obligation, to buy or sell a specified number of shares of a stock or other security during a specified period of time.

option

assets - liabilities =

owner's equity

the amount of money that the bond buyer is lending to the bond issuer is known as the

par value

stocks that sell for less than one dollar per share or stocks that are highly speculative are called ________ stocks.

penny

why does long term financing generally cost more than short term financing?

the value of a dollar decreases over time

which of the following is an example of a fixed asset?

transportation equipment

________ refer to short-term debt securities issued by the federal government.

treasury bills

________ refer to debt securities issued by the federal government that are repaid within 1 to 10 years after issuance.

treasury notes