Intro to Business FINAL EXAM Ch.16-20 & Ch. C
the 2008 financial crisis lead to the passing of what two acts?
#Dodd-Frank-Wall-Sreet-Act & #Consumer-Protection-Act
financial accounting
#accounting information and analyses prepared for people outside the organizaiton
#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
After distributing the taxes according to plan or allocating for taxes, the ______ is uncovered
#bottom-line
#inventory-turnover-ratio =
#cost-of-goods-sold / average inventory
_____ measures the amount of profit earned for each share of outstanding common stock, but also considers stock options, warrants, preferred stock, and convertible debt securities the firm can convert into common stock.
#diluted-earnings-per-share-ratio (#diluted-EPS)
the practice of writing every business transaction into two places
#double-entry-bookkeeping
Three of the more important ratios:
#earnings-per-share (#EPS) #return-on-sales #return-on-equity
basic EPS =
#net-income-after-taxes / number of common stock shares outstanding
return on equity =
#net-income-after-taxes / total #owners-equity
After deducting all expenses, the firm's _____ can be determined
#net-income-before-taxes
Three major activities of a firm: 3-6pts
#operations cash transactions associated with running the business #investments cash used in or provided by the firm's investment activities #financing cash raising by taking on new debt, or equity capital or cash used to pay business expenses, past debts, or company dividends
return on sales =
#return-on-sales = #net-income / #net-sales
income statement accounts (3-6pts)
#revenues sales revenue, rental revenue, commissions revenue, royalty revenue #cost-of-goods-sold cost of buying goods, cost of storing goods #expenses wages, rent, repaints, taxes, advertising, supplies, licenses, interest, storage, utilities (full list p485)
Darby's company reported net income after taxes of $2,000,000, on sales of $225 million. Her boss asked her to calculate the earnings per share for stockholders. Darby noted that the company's balance sheet showed 44 million shares outstanding. To explain to him that her calculation is correct, Darby's correct response is __________.
$0.045 per share. Earnings per share is calculated by taking net income after taxes and dividing by the total number of common shares issued and outstanding
If Beck's Bicycles, Incorporated's income statement shows gross profit of $350 million, with operating expenses of $120 million, and if Beck's tax rate is 30%, what is the firm's net income after taxes?
$161 Million
average college senior's debt
$4,100
If the paper reports the corporate bond price as 79 ½, the price an investor would have to pay is ____________.
$795
6 steps in the accounting cycle beginning to end:
(1) analyze source documents (2) record transactions in journals (3) transfer journal entries to a ledger (4) take a trial balance (5) prepare financial statements (6) analyze financial statements
Term is to phrase: (1) Accounting (4pts): (2) Bookkeeping: (3) Accounting cycle: (4) Trial balance:
(1) classifying, summarizing, interpreting, and reporting (2) recording (3) series of six steps (4) summary of data in ledgers
Duties of a financial manager do NOT include: (A) production planning; (B) budgeting; (C) obtaining funds; (D) cash management
(A) production planning
The three types of main budgets in financial management do NOT include which of the following: (A) cash budget; (B) sales budget; (C) capital budget; (D) operating, or master, budget
(B) sales budget
**Give each public relations campaign step a corresponding definition** - Listen to the public... - Change policies and procedures... - Inform people you're responsive to their needs...
- Listen to the public ...... has good marketing research to evaluate public attitudes ||||||||||||||||| - Change policies and procedures ...... creating programs and practices in the public's best interest ||||||||||||||||| - Inform people you're responsive to their needs ...... you have to tell the public about your programs
5 Standards for a Useful Form of Money •Portability •Divisibility: different-sized coins and bills represent different values •Stability •Durability •Uniqueness: so it is hard to counterfeit
...
An organization that issues bonds has a legal obligation to make regular interest payments to investors and to repay the entire bond principal amount at a prescribed time
...
As interest rates go up, bond prices fall, and vice versa
...
Bond interest is sometimes called the coupon rate
...
Bonds can be repaid before the maturity date if they contain a call provision
...
Commercial banks have two types of customers - depositors and borrowers (equally responsible for both)
...
Diversifying is done with a portfolio strategy or allocation model, which decreases the chance of losing everything they have invested
...
Electronic exchange of money is the most efficient way to transfer funds
...
If governments were to generate twice as much money available, but still the same amount of goods of services prices would go up because more people would try to buy goods and services with their money and bid up the price to get what they wanted
...
Interest rates are attractive and tempting in junk bonds, but if the company can't pay off the bond, the investor is left with an investment that isn't worth much more than the paper its written on (junk)
...
Securities markets are divided into primary and secondary markets
...
Some Smart Cards have embedded radio-frequency identification (RFID) chips that make it possible to enter buildings and secure areas and to buy gas and other items with the swipe of the card
...
The Federal Deposit Corporation (FDIC), Savings Association Insurance Fund (SAIF), and the National Credit Union Administration (NCUA) all deposit in individual accounts up to a certain amount (protect investors from ever again being completely wiped out during an economic downturn)
...
The Federal Reserve System consists of 5 major parts: (1) The board of governors; (2) the Federal Open Market Committee (FOMC); (3) 12 Federal Reserve Banks (the board of governors administers and supervises this); (4) three advisory councils; and (5) the member banks of the system
...
The Securities Act of 1933 helps protect investors by requiring full disclosure of financial information by firms selling bonds or stocks
...
There are several ways to refer to the money supply; they're called M-1, M-1, and M-3 oThe M stands for money and the 1, 2, and 3 stand for different definitions of the money supply
...
Under the Federal Reserve Act of 1913, all federally chartered banks had to join the Federal Reserve •Became the banker's bank
...
What makes a U.S. dollar weak (falling value) or strong (rising value) is the position of the U.S. economy relative to other economies
...
if someone steals your credit card you are only liable for a certain amount, but you are liable for everything when someone steals your debit card
...
if the margin rate is 50%, an investor who qualifies for a margin account may borrow up to 50% of the stock's purchase price from the broker
...
An acid test ratio between _#_ and _#_ is usually considered satisfactory but could also be a sign of some cash flow problems.
0.5; 1.0
Three categories of assets: 3-6pts
1, #current-assets - #term items that can or will be converted into cash within one year. include cash, accounts receivable, and inventory 2. #fixed-assets - #term long-term, relatively permanent e.g. land, building, equipment. (on a #balance-sheet they're referred to as property, plant, and equipment) 3. #intangible-assets - #term long0term, no physical form but have value. Patents, trademarks, copryrights, and goodwill
Common liability accounts recorded on a #balance-sheet : 3-6pts
1. #accounts-payable (current liabilities or bills the company owes to others for merchandise or services purchased on credit but not yet paid for) 2. #notes-payable (short-term or long-term liabilities that a business promises to repay by a certain date) 3. #bonds-payable (long-term liabilities that represent money lent to the firm that must be paid back)
Six steps of the accounting cycle & identify whether it is accounting or bookkeeping
1. Analyze source documents (BK) 2. Record transactions in journals (BK) 3. transfer journal entries to ledger (BK) 4. take a trial balance (BK) 5. prepare financial statements (A) 6. Analyze financial statements (A)
statement of cash flows includes: 3pts
1. Cash receipts from sales, commissions, fees, interest, and dividends. Cash payments for salaries, inventories, operating expenses , interest, and taxes. 2. Includes cash flows that are generated thru a company's purchase or sale long-term operational assets, investments in other companies, and its lending activities. 3. Cash inflows and outflows associated with the company's own equity transactions or its borrowing activities
How do assets, liabilities, and equity pertain to a balance sheet or how are they expressed on a balance sheet? 7-14pts
1. Current assets items that can be converted to cash within one year 2. Fixed assets items such as land, buildings, and equipment that are relatively permanent 3. Intangible assets items of value such as patents and copyrights that don't have a physical form 4. Current liabilities payments that are due in one year or less 5. Long-term liabilities payments not due for one year or longer 6. Owner's equity the value of what stockholders own in a firm (aka stockholder's equity)
#2 (accounting system) Processing:
1. Entries are made into journals: recording 2. The effects of these journal entries are transferred or posted into ledgers: classifying 3. All accounts are summarized
Financial planning involves: (3 steps)
1. Forecasting short-term and long-term needs 2. Developing an overall budget to meet the short-term and long-term financial needs 3. Establishing financial controls
Possible Essay Options - There are seven choices on your exam; you must write on two of them. The following are examples of what you may see on your semester exam.
1. Interviewing Techniques - Using social media to "screen" potential employees and their rights to privacy 2. Personal Goal Setting - short-term and long-term goals, college, how to pay for higher education 3. Consumer Bill of Rights - rights, responsibilities, lawsuits 4. Money Management and Bankruptcy - budgeting your money, reckless spending and declaring bankruptcy 5. Advertising Trends - humor, cute kids, cute animals, testimonials by actors, athletes, politicians, etc; your favorite commercials 6. Identity Theft - hackers, hand-held scanners, recent breaches, how to protect yourself, Congressional legislation 7. Positive and Negative Effects of Technological Changes in Our Economy - advancements in your lifetime! 8. Scarcity of Resources - limited resources but unlimited wants and needs; personal lifestyles 9. Credit Card Misuse - impulse buying, bankruptcy, government involvement, winners and losers in these situations
What does an income statement include? (5-10pts)
1. Revenue: value of what's received from goods sold, services rendered, and other financial sources 2. Cost of goods sold: cost of merchandise sold or cost of raw materials or parts used for producing itmes for resale 3. Gross profit: how much the firm earned by buying or selling merchandise 4. Operating expenses: cost incurred in operating a business 5. Net income after taxes: profit or loss over a specific period after subtracted all costs and expenses, including taxes
What are the three steps in the financial planning process in order from beginning to end?
1. forecasting the firm's financial needs 2. developing budgets 3. establishing financial controls
6 steps of a promotional campaign:
1. identify a target market 2. define the objectives for each element in the promotion mix 3. determine a promotional budget 4. develop a unifying message 5. implement a plan 6. evaluate effectiveness
Place in rank the steps of a good public relations program. 3pts
1. listen to the public 2. change policies and procedures 3. inform people you're responsive
What are the four key areas of financial needs? And what usually should be the primary source for these funds and when it's not, what typically causes it to not be? Why?
1. managing day-to-day needs of the business 2. controlling credit operations 3. acquiring needed inventory 4. making capital expenditures ; sales; capital expenditures; the funds will have to be drawn from a lending institution
anything over __% return on equity is a reasonable return
15%
How far in the future can long-term forecast provide projections?
5-10 years
average credit score
696 in the USA; 630 in Michigan
Inventory Turnover Ratio
= (Costs of goods sold)/(average inventory)
Basic Earnings Per Share Ratio - Basic EPS
= (net income after taxes)/(number of common stock shares outstanding). It helps determine the amount of profit a company earned for each share of outstanding common stock
Speculative Risk
A chance of either profit or loss.
Cost of Goods Sold (or Cost of Goods Manufactured)
A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale.
Certified Management Accountant (CMA)
A professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accountants.
Uninsurable Risk
A risk that no insurance company will cover.
Insurable Risk
A risk that the typical insurance company will cover.
MD&A - Management Discussion and Analysis
A section of a company's annual report in which management discusses numerous aspects of the company, both past and present.
Accounting Cycle
A six-step procedure that results in the preparation and analysis of the major financial statements.
What is the major problem with selling on credit?
A sizeable portion of a firm's assets could be tied up in accounts receivable.
Ledger
A specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place.
Claim
A statement of loss that the insured sends to the insurance company to request payment.
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 transactions that have occurred over a particular period.
Mutual insurance comany
A type of insurance company owned by its policyholders.
Stock insurance company
A type of insurance company owned by stockholders.
Insurance Policy
A written contract between the insured and an insurance company that promises to pay for all or part of a loss
Annual Report
A yearly statement of the financial condition, progress, and expectations of an organization.
Financial managers examine the financial data prepared by ___________ and make recommendations to top executives about strategies for improving the financial strength of a firm.
Accountants
Financial Accounting
Accounting information and analyses prepared for people outside the organization
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.
Managerial Accounting
Accounting used to provide information and analyses to managers inside the organization to assist them in decision making.
SOX - Sarbanes-Oxley Act
After WorldCom, Enron, and Tyco, get engulfed in accounting scandales, congress passes this act (2002). This legislation created new government reporting standards for publicly traded companies. It also created the PCAOB.
AICPA 2pt
American Institute of Certified Public Accountants (#AICPA); established examinations for potential CPAs
Tax Accountant
An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies.
Certified Internal Auditor (CIA)
An accountant who has a bachelor's degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors.
Certified Public Accountant (CPA)
An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA).
Public Accountant
An accountant who provides accounting services to individuals or businesses on a fee basis.
Private Accountant
An accountant who works for a single firm, government agency, or nonprofit organization.
Independent Audit
An evaluation and unbiased opinion about the accuracy of a company's financial statements.
Liabilities + Owner's Equity
Assets = ?
What's the fundamental accounting equation?
Assets = Liabilities + Owners' equity
fundamental-accounting-equation
Assets = Liabilities + Owners' equity'this is the basis for the #balance-sheet
Fundamental Accounting Equation
Assets = Liabilities + Owners' equity; this is the basis for the balance sheet
What are the major accounts of the balance sheet? (3 terms + a brief definition + equation... 7pts)
Assets are economic resources owned by the firm, such as building and machinery. Liabilities are amounts the firm owes to creditors, bondholders, and others. Owners' equity is the value of everything the firm owns -- its assets minus any liabilities; thus, Owners' equity = Assets - liabilities
Fixed Assets
Assets that are relatively permanent, such as land, buildings, and equipment.
Q - A firm designing an advertising campaign to sell motor oil to the major automobile manufacturers is an example of ____ advertising
B2B
#3 (accounting system) Outputs: Financial statements (5pts)
Balance sheet, income sheet, statement of cash flows, other reports, (e.g. annual reports)
The following information is listed on Beck's Bicycles, Incorporated's Balance Sheet as of 12/30/2012 _____________. If you were one of Beck's accountants and you were asked to evaluate if the firm has enough funds to pay its bills that are coming due in the next few months, how would you respond?
Beck's will have enough funds to pay bills coming due in the next few months, as long as it continues to collect money that others owe Beck's and it turns over (sells) at least $7 million in inventory.
As an attorney who advocates for disabled children, Patty created a(n) ________ to provide expert opinion and other resources to a targeted group who needed her services. This promotional tool was similar to an online diary on the Web, and spread messages quickly and efficiently, sort of like word-of-mouth testimonials.
Blog
What is the difference between bookkeeping and accounting and accounting? 6pts
Bookkeeping is part of accounting and includes the systematic recording of data. Accounting include classifying, summarizing, interpreting, and reporting data to management.
Which of the following would be considered a convenience good?
Candy bar
Q - What shows a firm's spending plans on fixed assets such as large equipment?
Capital budget
What is a statement of cash flows? 7pts
Cash flow is the difference between cash receipts (money coming in) and cash disbursements (money going out). The statement of cash flows reports cash receipts and disbursements related to the firm's major activities: operations, investments, and financing.
How do computers help accountants? 7pts
Computers can record and analyze data and provide financial reports. Software can continuously analyze and test accounting systems to be sure they are functioning correctly. Computers can help decision making by providing appropriate information, but they cannot themselves make good financial decisions. Accounting applications and creativity are still human functions.
Operating Expenses
Costs involved in operating a business, such as rent, utilities, and salaries.
PCAOB - Public Company Accounting Oversight Board
Created by SOX, it is in charge of overseeing the AICPA (American Institute of Certified Public Accountants).
Accounts Payable
Current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for.
FASB - Financial Accounting Standards Board
Defines the generally accepted accounting principles (GAAP) that accountants must follow. If accounting reports are prepared in accordance with GAAP, users can expect the information to meet standards accounting professionals have agreed on.
Big Four Accounting Firms
Deloitte Touche Tohmatsu PwC Ernst & Young KPMG
Assets
Economic resources (things of value) owned by a firm.
Environmental Protection Agency (EPA)
Federal agency that enforces pollution reduction, sets standards for water & air quality, and eliminates environmental hazards
Buying and selling goods, acquiring insurance and using supplies represent __________ transactions.
Financial
FASB
Financial Accounting Standards Board; the defines the generally accepted #accounting principles;
If your job is to compare actual expenses incurred by your company, with financial projections previously created, you are performing the task of __________.
Financial Control
Which of the following is most helpful in analyzing the financial performance of a company?
Financial Ratios
Balance Sheet
Financial statement that reports a firm's financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners' equity.
Statement of Cash Flows
Financial statements that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing.
Mac and Zac want to start their own youth sports academy, to teach baseball skills to young boys. Which of the following steps in the marketing process is a good place to begin?
Find out what young baseball players want to achieve
How does bookkeeping word or what is the step process?
First: divide all the firm's transactions into meaningful categories such as sales documents, purchasing receipts and shipping documents, being very careful to keep the information organized and manageable Then: record financial data from the orginal transaction documents into a record book or computer program called a #journal
Small businesses that are just getting off the ground often have cash _________ problems. This is simply the difference between cash coming into the business less any cash going out of the business. If the company allows for too lenient credit sales terms, customers do not pay on time, which magnifies this situation.
Flow
Which utility is usually provided by producers rather than intermediaries?
Form
Balance sheets follow the accounting principles/guidelines of ...
GAAP
If Tom and Tony each had a corporation, then what set of rules would prevent them from creating unique formats of information in their financial statements?
GAAP
The principles that accountants must follow in order to assure that a firm's accounting information is accurate are abbreviated as:
GAAP
How do goodwill and balance sheets relate?
Goodwill is included when a firm acquires assets
GASB - Governmental Accounting Standards Board
Government accounting standards are set by this board
Who sets the government accounting standards?
Governmental Accounting Standards Board (GASB)
Preferred provider organizations (PPOs)
Health care organizations similar to HMOs except that they allow members to choose their own physicians (for a fee).
Health maintenance organizations (HMOs)
Health care organizations that require members to choose from a restricted list of doctors.
Computers can record and analyze data and provide financial reports. Software can continuously analyze and test accounting systems to be sure they are functioning correctly. Computers can help decision making by providing appropriate information, but they cannot themselves make good financial decisions. Accounting applications and creativity are still human functions.
How do computers help accountants?
Managerial accounting provides information and analyses to managers within the firm to assist them in decision making. Financial accounting provides information and analyses to external users of data such as creditors and lenders.
How does managerial accounting differ from financial accounting?
Gross Profit (or gross margin)
How much a firm earned by buying (or making) and selling merchandise.
Andrew is contemplating selling the bonds he holds prior to their date of maturity. Which of the following may result in Andrew's bonds being worth less than their face value, if he decides to sell prior to the maturity date?
If interest rates for similar bonds are higher than the interest rate Andrew's bond is paying.
The Balance Sheet, the Statement of Cashflows, and the ___ are three key financial statements.
Income Statement
In order for information to be meaningful, a firm's accounting processes and procedures should be certified as accurate by nationally acceptable accounting standards. Companies hire _________________ to provide unbiased opinions about the accuracy of a firm's financial statements.
Independent Auditors
Q - Why is the statement ¨successful promotion integrates each element of the promotion mix, creating a well unified message¨ a very accurate statement?
Integrated Marketing Communication (IMC) combines the promotional tools into one comprehensive, unified promotional strategy.
Current Assets
Items that can or will be converted into cash within one year.
What are journals and ledgers? 4pts
Journals are the first place bookkeepers record transactions. Bookkeepers then summarize the journal entries by posting them to ledgers. Ledgers are specialized accounting books that arrange the transactions by homogeneous [Uniform in structure or composition throughout] groups (accounts)
The movement of information and the movement of goods is a function of which of the following?
Logistics
Intangible Assets
Long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value.
Bonds Payable
Long-term liabilities that represent money lent to the firm that must be paid back.
M-3
M-2 plus big deposits like institutional money market funds
Differentiating your product so that it will appeal to additional market segments occurs most often at which stage of the product life cycle?
Maturity
Liquidity Ratios
Measure a company's ability to turn assets into cash to pay its short-term debts (liabilities that must be repaid within one year). Two key liquidity ratioos are the current ratio (current assets)/(current liabilities) and the acid-test ratio (or quick ratio) (cash+accounts receivable+marketable securities)/(current liabilities).
Leverage (debt) ratios
Measure the degree to which a firm relies on borrowed funds in its operations. Example: Debt to owners' equity ratio = (total liabilities)/(owners' equity)
Diluted EPS - Diluted earnings per share ratio
Measures the amount of profit earned for each share of outstanding common stock, but also considers stock options, warrants, preferred stock, and convertible debt securities the firm can convert into common stock.
Why are handling objections an important step in personal selling? 3pts
Objections offer an opportunity to build trust; objections offer opportunities to explain product features; objections offer a chance to introduce others in the firm to provide additional support
Law of large numbers
Principle that if a large number of people are exposed to the same risk, a predictable number of losses will occur during a given period.
Major provisions of Sarbox 6pt
Prohibits #accounting firms from providing certain non-auditing work (such as consulting services) to companies they audit Strengthens the protection for whistle-blowers who report wrongful actions of company officers; Requires company CEOs and CFOs to certify the accuracy of financial reports and imparts strict penalties for any violation of securities reporting (e.g. earnings misstatements); Prohibits corporate loans to directors and executives of the company; Establishes the five-member #Public-Company-Accounting-Oversight-Board (#PCAOB) under the #Securities-and-Exchange-Commission (#SEC) to oversee the #accounting industry; Stipulates that altering or destroying key audit documents will result in felony charges and significant criminal penalties
When Beck's Bicycles, Inc. volunteered to send its expert riders up mountainous terrain to rescue a lost dog that was unable to free himself from a cliff, it received accolades not only from other bicyclists, but from the public in general. Beck's marketing director insisted that the company show a video of the search and rescue on its social media site and on-line advertising. The effort quickly turned into an important _____________ campaign for the firm.
Public Relations
Q - When customers confronted Stupid-Expensive Shoes Inc about a company that was using sweatshop workers to produce its products, Stupid-Expensive Shoes Inc developed a programs that required suppliers to meet minimum worker safety standards. Stupid-Expensive Shoes Inc tries to inform its customers of these policies on its website. This is an example of ...
Public relations
_____________is an unpaid form of promotion. It can have positive and negative effects on the recipient. When you log onto Yahoo™ and read that four auto assembly line plants are closing, it is not good news for our economy. However, on the same site, if you read about a motor company's water recycling effort targeted toward good stream management, you are usually impressed.
Publicity
When Fountain of Youth Tea Company (FYT) wanted to secure shelf space in high-end grocery stores, it found that it had a lot of competition. In order to get the attention of retailers, FYT directed its promotion toward the consumer who desired a refreshing tea drink, as opposed to carbonated beverages. Due to a successful campaign, it compelled the grocers to feature it in the stores. FYT used _______ strategy.
Pull
New packaging technology that allows companies to track products through radio frequency identification is referred to as ____________
RFID
Accumulated earnings from a firm's profitable operations that are kept in the business and not paid out to stockholders are called _____________.
Retained Earnings
Net Income or Net Loss
Revenue left over after all costs and expenses, including taxes are paid.
Rule of Indemnity
Rule saying that an insured person or organization cannot collect more than the actual loss from an insurable risk.
The __________ is the federal regulating body for the securities markets.
SEC (Securities and Exchange Commission)
#1 (accounting system) Inputs: Accounting documents (name a few of the 7 examples)
Sales documents, purchasing documents, shipping documents, payroll documents, payroll records, bank records, travel records, entertainment records
Which of the following statements about personal selling is true today?
Salespeople are starting to use the Internet and other technology to do everything it takes to complete the order.
When Marmalade's Cupcake Closet is not jammed with happy customers, one or two of its sales associates stand out front and provide tastes of Marmalade's sumptuous goodies, in the form of miniature-sized treats. The company owners know that ________ is a very powerful form of promotion.
Sampling
What caused Sarbanes-Oxley-Act (#Sarbox) to pass?
Scrutiny (close surveillance) in the #accounting industry being intensified leads Congress to pass this
Notes Payable
Short-term or long-term liabilities that a business promises to repay by a certain date.
Health savings accounts (HSAs)
Tax-deferred savings accounts linked to low-cost, high-deductible health insurance policies.
Activity Ratios
Tell us how effectively management is turning inventory into profits. Example: Inventory Turnover Ratio.
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.
Ratio Analysis
The assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements.
Risk
The chance of loss, the degree of probability of loss, and the amount of possible loss.
Cash Flow
The difference between cash coming in and cash going out of a business. Operations, Investment, Financing.
Liquidity
The ease with which an asset can be converted into cash.
Like most stock exchanges, the NYSE EURONEXT, the world's largest stock exchange has seen its business model evolve. Which of the following represents that evolution?
The exchange now sells large amounts of market information to other companies.
Premium
The fee charged by an insurance company for an insurance policy.
Income Statement
The financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm (expenses), and the resulting net income.
Auditing
The job of reviewing and evaluation the information used to prepare a company's financial statements.
Insurable Interest
The possibility of the policyholder to suffer a loss.
Self-insurance
The practice of setting aside money to cover routine claims and buying only "catastrophe" policies to cover big losses.
Double-entry Bookkeeping
The practice of writing every business transaction in two places.
Journal
The record book or computer program where accounting data are first entered.
Bookkeeping
The recording of business transactions
Accounting
The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions.
Depreciation
The systematic write-off of the cost of a tangible asset over its estimated useful life.
Pure Risk
The threat of loss with no chance for profit.
The U.S. Securities and Exchange Commission - SEC
They have suggested that International Accounting Standards Board (IASB) replace the Generally Accepted accounting Principles (GAAP) with the International Financial Reporting Standards (IFRS) in the near future.
How do consumers benefit from advertising?
They receive valuable information, and advertising can even pay for the media that delivers the message
How do consumers benefit from advertising?
They receive valuable information, and advertising can even pay for the media that delivers the message.
Owners' Equity
Total Assets minus Total Liabilities of the company. Also known as net worth of the company or shareholders assets or net assets. The amount of the business that belongs to the owners minus any liabilities owed by the business.
Ledgers can yield information to compile which of the following?
Trial Balances
Q - How does finance differ from accounting? long explanation, then summed up one. I think you should know them both
WHY? Finance is the act of acquiring and managing funds for the firm. This process includes planning, auditing, managing taxes, advising top management on financial matters, collecting funds, controlling funds, obtaining funds, and budgets. Accounting is the preparation and recording of data and financial statements that others inside and outside the firm use to make decisions; SUMMED UP (Quiz answer) Financing is acquiring and managing funds for the firm and accounting is preparing information in a way that is meaningful to others;
Journals are the first place bookkeepers record transactions. Bookkeepers then summarize journal entries by posting them to ledgers. Ledgers are specialized accounting books that arrange the transactions by homogeneous groups (accounts).
What are journals and ledgers?
"Cooking the Books" Early Recognition of Revenue Late Recognition of Expense Inadequate Reserves for Bad Debts, Returns, & Liabilities Changing Inventory Valuation Methods- 1 Time Boost to Income Phony Transactions With Partnerships
What are some accounting issues and challenges?
1. The Business Entity (assumes that the business is separate from its owners or other businesses. Revenue and expense should be kept separate from personal expenses) 2. The Business Transaction (more than one principle about how to record a transaction accrual vs. cash etc) 3. Going Concern (assumes that the business will be in operation indefinitely. This validates the methods of asset capitalization, depreciation, and amortization. Only when liquidation is certain this assumption is not applicable.) 4. Periodicity (implies that the economic activities of an enterprise can be divided into artificial time periods.) 5. Money Basis for Reporting (assumes a stable currency is going to be the unit of record. The FASB accepts the nominal value of the US Dollar as the monetary unit of record unadjusted for inflation.) 6. Objectively Verifiable Evidence (the company financial statements provided by the accountants should be based on objective evidence.) 7. Adequate Disclosure (Amount and kinds of information disclosed should be decided based on trade-off analysis as a larger amount of information costs more to prepare and use. Information disclosed should be enough to make a judgment while keeping costs reasonable. Information is presented in the main body of financial statements, in the notes or as supplementary information) 8. Conservatism (when choosing between two solutions, the one that will be least likely to overstate assets and income should be picked) 9. Materiality (the significance of an item should be considered when it is reported. An item is considered significant when it would affect the decision of a reasonable individual.) 10. Consistency (It means that the company uses the same accounting principles and methods from year to year.)
What are the Foundations of Accounting?
The four key categories of ratios are liquidity rations, leverage (debt) ratios, profitability (performance) ratios, and activity ratios.
What are the four key categories of ratios?
1. Analyzing documents 2. Recording information into journals 3. Posting that information into ledgers 4. Developing a trial balance 5. Preparing financial statements - the balance sheet, income statement, and statement of cash flows 6. Analyzing financial statements
What are the six steps of the accounting cycle?
Cash flow is the difference between cash receipts (money coming in) and cash disbursements (money going out). The statements of cash flows reports cash receipts and disbursements related to the firms' major activities: operations, investments, and financing.
What is a statement of cash flows?
A public accountant provides services for a fee to a variety of companies, whereas a private accountant works for a single company. Private and public accountants do essentially the same things with the exception of independent audits. Private accountants do perform internal audits, but only public accountants supply independent audits.
What is the difference between a private accountant and a public accountant?
Bookkeeping is part of accounting and includes the systematic recording of data. Accounting includes classifying, summarizing, interpreting, and reporting data to management.
What is the difference between bookkeeping and accounting?
Auditors review and evaluate the standards used to prepare a company's financial statements. An independent audit is conducted by a public accountant and is an evaluation and unbiased opinion about the accuracy of a company's financial statements.
What is the job of an auditor?
Ratio analysis provides the firm with information about its financial position in key areas for comparison to other firms in its industry and its own past performance.
What is the major value of ratio analysis to the firm?
Liabilities
What the business owes to others (debts).
What does Assets = Liabilities + Owners' equity mean?
Your assets are now equal to what you owe plus what you own
Accrual vs. cash Accounting
Your computer installation business finishes a job in November, and doesn't get paid until three months later in January. Under the cash method, you would record the payment in January. Under the accrual method, you would record the income in your November books.
warehouse club
a "no frills" store selling large quantities at reasonable prices; examples include COSTCO and Sam's Club
mediation
a "non-binding" decision of a third party who tries to resolve a complaint between the consumer and the business
What is a balance sheet?
a balance sheet reports the financial position of a firm on a particular day. The fundamental accounting equation used to prepare the balance sheet is Assets = Liabilities + Owners' equity
Central Bank
a bank at which other banks could keep their funds and borrow funds if needed
Q - The ¨IOU¨ that is issued by a coporation or government to raise needed funds, promising to repay the principal amount by a certain date along with a certain rate of interest, is called
a bod
A company that issues _______ has a legal obligation to make regular interest payments and to repay the principal amount at a prescribed time.
a bond
cooperative
a business formed to market products produced by members or to purchase products needed by its members. It is owned by members. Examples include credit unions and warehouse club stores like COSTCO and Sam's Club
credit reference
a business or an individual who is able and willing to provide information about your credit worthiness
partnership
a business owned and controlled by two or more people who have entered into a written agreement
sole proprietorship
a business owned and run by just one person
(Step 2 of Financial Planning: Working with the budget process) A ______ highlights the spending plans for major purchases
a capital budget
(Step 2 of Financial Planning: Working with the budget process) a ____ estimates cash inflows and outflows
a cash budget
What is a CMA? 2pts
a certified management accountant; a professional accountant who has met certain educational and experience requirements, passed a qualifying exam, and been certified by the Institute of Certified Management Accountants.
cashier's check
a check that a bank "draws/writes" on its own funds
Electronic Fund Transfer (EFT)
a computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks
Prospectus
a condensed version of economic and financial information that a company must file with the SEC before issuing stock; the prospectus must be sent to prospective investors
safe-deposit box
a container for storage of valuables offered by banks
Bond
a corporate certificate indicating that a person has lent money to firm (or a government)
Direct Deposit
a credit made directly to a checking or savings account in place of a paycheck
credit bureau
a credit reporting agency that is a clearinghouse for information on the credit rating of individuals
deflation
a decrease in the general level of prices of goods and services, which usually occurs during a recession or a depression
improvement
a design change that increases the usefulness of an existing product, service, or process
define dividend:
a distribution from the net profits of a company to its shareholders
Par Value
a dollar amount assigned to each share of stock by the corporation's charter
Q - The concept, ¨time is money¨ indicates:
a dollar received today is worth more than a dollar received a year from today.
service charge
a fee that a bank charges for handling a checking account
career
a goal in life that is fulfilled through a job or a series of occupations
substitute
a good that "easily" replaces another such as Coke for Pepsi (beverage)
Federal Deposit Insurance Corp. (FDIC)
a government agency that protects deposited money (up to $250,000) in case of a bank failure
Service Corps of Retired Executives (SCORE)
a group of retired local business people who volunteer their services to counsel and mentor new business owners
non-profit corporation
a group that benefits the public that is "free" from income taxes. Examples include Gleaners, Salvation Army, and P & B Ministries
arbitration
a legally binding decision by a third party, which both parties involved must follow
installment loan
a loan in which you agree to make monthly payments in specific amounts over a period of time
survey
a market research study that gathers information from people using a carefully planned set of questions
experiment
a marketing research method which presents two carefully controlled alternatives (A or B) to consumers in order to determine which is preferred or has better results
observation
a marketing research study that collects information by recording the actions of consumers rather than asking them questions
focus group
a marketing research study that gathers the ideas, experiences, and opinions from a small number of consumers who take part in a group discussion
cost of goods sold
a measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale
As quoted on an intraday report, a stock's Beta is __________.
a measurement of its risk value
The idea behind marketing (known as the marketing concept) is ___________.
a mutually beneficial exchange between buyers and sellers, where buyers receive quality products and good service, and sellers realize a profit
NASDAQ (National Association of Securities Dealers Automated Quotations)
a nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically
talent
a natural, inborn aptitude to do certain things
Reserve Requirement
a percentage of commercial banks' checking and savings accounts that must be physically kept in the bank
depression
a period of severe economic decline characterized by prolonged high unemployment, weak consumer sales, low production, and shortages of goods
Direct Payment
a preauthorized electronic payment
extractor
a producer that takes resources from nature for direct consumption or for use in making other products. Examples include pumping oil, mining coal, and cutting timber
Commercial Bank
a profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans
Letter of Credit
a promise by the bank to pay the seller a given amount if certain conditions are met
Banker's Acceptance
a promise that the bank will pay some specified amount at a particular time
credit history
a record of how a consumer has repaid credit obligations in the past
Stockbroker
a registered representative who works as a market intermediary to buy and sell securities for clients
bank statement
a report sent by the bank to a depositor showing the status of an account
Sinking Fund
a reserve account in which the issuer of a bond periodically retires some part of the bond principle prior to the maturity so that enough capital will be accumulated by the maturity date to pay off the bond
EPS (earnings per share)
a revealing ratio bc earnings help stimulate the firm's growth and provide for stockholders' dividends.
entrepreneur
a risk taker who uses existing resources to create new goods
check register
a separate book form on which a depositor keeps a record of checking account activities
traditional economy
a simple economy that is less developed; follows traditions; lacks technology
Accounting Cycle
a six-step procedure that results in the preparation and analysis of the major financial statements
accounting cycle
a six-step procedure that results in the preparation and analysis of the major financial statements.
ledger
a specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place
target market
a specific group of customers that have similar wants and needs
Financial Statement
a summary of all the financial transactions that have occurred over a particular period
financial statement
a summary of all the transactions that have occurred over a particular period
Barter Exchange
a system where you can put goods or services into the system and get trade credits for other goods and services that you need (finds people for you to barter with)
goods
a tangible item you can see and touch such as a car, pencil, book, or iPad.
occupation
a task or series of tasks performed to provide a good or service
Certificate of Deposit (D)
a time-deposit (savings) account that earns interest to be delivered at the end of the certificate's maturity date
trademark
a word, letter, or symbol (logo) "linked" with a company or a product
Annual Report
a yearly statement of the financial condition, progress, and expectations of an organization
annual report
a yearly statement of the financial condition, progress, and expectations of an organization - condition, progress, expectation; yearly
Open-End Funds
accept the investment of any interested investors
Certified Internal Auditor (CIA)
accountants who have a bachelor's degree and two years of experience in internal auditing, and who pass an exam administered by the Institute of Internal Auditors
what is the language of business?
accounting
accounting scandals make people question what?
accounting firms doing both auditing and consulting
If financial management is the heartbeat of competitive businesses, what keeps that heartbeat stable?
accounting information
managerial accounting
accounting used to provide information and analyses to managers inside the organization to assist them in decision making
Calendar Year
accounting year that begins January 1st and ends December 31st
Fiscal Year
accounting year that can begin at any date designated by the business
A current bill that a company owes to others that is the result of buying merchandise on credit is called:
accounts payable
Term for - not paid for yet
accounts payable
Retained Earnings
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
accumulated earnings not paid out to stockholders
Q - An effective budget requires:
accurate forecasts
Analyzing a company's _____ ratio is one way in which an investor can tell if the company can pay off its short-term debts if there is a drop in sales revenue
acid-test ratio
Finance is the act of ____ and ___ funds for the firm. This process includes ___, ___, ___, ___, ___, ___, ___, & ___.
acquiring; managing;.... planning; auditing; managing taxes; advising top management on financial matters; collecting funds; controlling funds; obtaining funds; budgeting
interests
activities that give you satisfaction and can provide a basis for your employment goals and possible career paths
the ratios that measure the effectiveness of a firm's management in using the assets that are available are called: (2pts)
activity ratios; performance ratios
Q - Any paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the message is called ..
advertising
Q - ___ refers to any paid, non-personal communication thru various media by organizations and individuals who are in some way identified in the message
advertising
Q - ______ refers to any paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the message.
advertising
Q - The four elements of the promotion mix are...
advertising, personal selling, public relations, and sales promotion
Q - The traditional promotional mix for a firm consists of the: 5pts
advertising, personal selling, public relations, and sales promotion used to reach a target market.
What are three tools that marketers use to promote products?
advertising; public relations; personal selling
revenue
all income that a business receives over a period of time
Preemptive Right
allows common stockholders' to purchase new shares of common stock before anyone else
store brand
also referred to as "private label"; this is a brand owned by a store. A good example is Craftsman tools sold by Sears
Pension Funds
amounts of money put aside by corporations, nonprofit organizations, or unions to cover part of the financial needs of members when they retire
Private Accountant
an accountant that works for a single firm, government agency, or nonprofit organization
Public Accountant
an accountant that, for a fee, provides accounting services to individuals or businesses
Tax Accountant
an accountant trained in law and responsible for preparing tax returns or developing tax strategies
tax accountant
an accountant trained in tax law and responsible for preparing tax returns or developing tax strategies
Certified-internal-auditor (CIA) 2pts
an accountant who has a bachelor's degree and two years of experience in #internal-auditing, and who has passed an exam administered by the #Institute-of-Internal-Auditors
A Certified Public Accountant (CPA) is ___________.
an accountant who has met educational requirements and has passed exams established by the American Institute of Certified Public Accountants
Certified Public Accountant (CPA)
an accountant who passes a series of examinations by the American Institute of Certified Public Accountants (AICPA) and meets the state's requirements for education and experience
what is a public accountant?
an accountant who provides accounting services to individuals or businesses on a fee basis
Stock Splits
an action by a company that gives stockholders two or more shares of a stock for each one they own
Accounts Receivable
an amount of money owed to a firm that it expects to receive within one year (considered a liquid asset because it can quickly be converted to cash)
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
Smart Card
an electronic funds transfer tool that is a combination credit card, phone card, driver's license card, and more
Debit Card
an electronic funds transfer tool that serves the same function as checks: it withdraws funds from a checking account
Independent Audit
an evaluation and unbiased option about the accuracy of a company's financial statements
What is an income statement? 3pts; What are the formulas used to prepare the income statement?
an income statement reports revenues, costs, and expenses for a specific period of time; revenue - cost of goods = gross margin gross margin - operating expenses = net income before taxes net income before taxes - taxes = net income (or net loss)
inflation
an increase in the general level of prices; it is harmful to people on fixed incomes (like retirees)
Federal Deposit Insurance Corporation (FDIC)
an independent agency of the U.S. government that insures bank deposits
small business
an independent business with fewer than 500 employees; employs more than 60% of private sector employees and accounts for over 50% of yearly GDP. Ideas for new businesses can include books, magazines, personal experiences, hobbies and interests
innovation
an invention or creation that is brand new
(Step 2 of Financial Planning: Working with the budget process) an ______ or ______ ties together the firm's other budgets
an operating aka master budget
Mutual Fund
an organization that buys stocks and bonds and then sells shares in those securities to the public
Stock Exchange
an organization whose members can buy and sell (exchange) securities for companies and individual investors
After one year of operating a youth sports academy in their hometown, Mac and Zac learned that several enthusiastic baseball players were driving to a larger town to receive similar services. In order to learn about the potential customers who were going elsewhere for service, Mac and Zac proceeded to scan the Internet to determine how competitors' services differed from theirs. They learned that competitors were open longer hours on weekends, and even had celebrity endorsements. The new information Mac and Zac collected, and its interpretation was the _______________ part of the marketing research process.
analysis
Accountant Alan Winger has just completed the balance sheet, income statement, and statement of cash flows for his company. The next step in the accounting cycle involves...
analyzing the firm's financial statements to evaluate the financial condition of the firm.
It is mandated that a public firm fully disclose its financial data once a year in their:
annual report
A salesperson who has anticipated customer doubt about a product and formulated proper responses is ready for the ..... stage of the selling process
answer objections
Q - Fatima has just finished making a sales presentation to a major prospect. Her next step is ....
answering objections
advertising
any paid form of communication through mass media directed at consumers to provide information and influence them to buy
Money
anything that people generally accept as payment for goods and services
average credit card debt per household
approximately $15,000
college freshmen
approximately 91% have credit cards and owe more than $1,500
Why have infomercials been so successful? 2pts
are equivalent to sending out your best salespeople; show the product in detail
selling expenses
are related to the marketing and distribution of the firm's goods or services, such as advertising, salespeople's salaries, and supplies
3 correct statements about pledging include?
as account receivable is paid, the money is forwarded to the lender as repayment of the loan; a firm gets a percentage of accounts receivable pledged as a loan; a firm's accounts receivable is used a a basis for loan
Because of the time value of money, businesses should keep cash invested for ___ ___ ___ ___ to maximize investment potential
as long as possible
equity =
assets (the value of things you own) - liabilities (the amount of money you owe to others)
formula for owners' equity
assets - liabilities = owners' equity
(on a balance sheet) - assets is.... liabilities is.... and equity is....
assets = everything you own; liabilities = money owed; equity = subtracting assets with liabilities.
The balance sheet shows liabilities of $5,000,000 and owners' equity of $5,237,000. According the the fundamental equation....
assets equal $10,237,000
The fundamental accounting equation is ____________.
assets= liabilities + owner's equity
One of the major functions of the securities markets is to ____________.
assist businesses in finding long-term funding to finance business expansion
¨Did the business earn or lose money in the specific reporting period?¨ is answered where?
at the bottom line
Reviewing and evaluating records used to prepare a company's financial statements is referred to as:
auditing
_____ involves the review and evaluation of the records that are used to prepare the organization's financial statements.
auditing
What is the job of an auditor? 3pts
auditors review and evaluate the standards used to prepare a company's financial statements. An independent audit is conducted by a public accountant and is an evaluation and unbiased opinion about the accuracy of a company's financial statements
installment loans
auto loans, student loans, mortgages; you pay a pre-determined payment amount over a specific period of time
Why is being a CMA or managerial accounting important? 3pts
b/c of growing emphasis on global competition, outsourcing, and organizational cost-cutting
Mortgage Bonds (Secured Bonds)
backed by collateral such as land or buildings that is pledged to bondholders if interest or principal isn't paid when promised
____ accounts #assets cash, #accounts-receivable, inventory, investments, equipment, land, buildings, vehicles, goodwill #liabilities #accounts-payable, #notes-payable, #bonds-payable, #taxes-payable #owners-equity capital stock, #retained-earnings, common stock, treasury stock
balance sheet
The key financial statements of a business are: 3pts
balance sheet; income statement; statement of cash flows
In accounting, the fundamental accounting equation must always be _____
balanced/equal
In order to be a certified management accountant a person must: (3pts)
be certified by the Institute of Certified Management Accountants; pass a qualifying exam; meet educational requirement;
What do CPAs find careers doing? 3pts
being a public accountant or private accountant or fill other financial position
Q - the evidence supports the position that promotional efforts specifically designed for individual countries produce:
better results than a global promotional strategy
As an attorney who advocates for disabled children, Patty created a(n) ________ to provide expert opinion and other resources to a targeted group who needed her services. This promotional tool was similar to an online diary on the Web, and spread messages quickly and efficiently, sort of like word-of-mouth testimonials.
blog
Which of the following is a long-term debt obligation of a corporation or government?
bond
An older person nearing retirement might typically find it better to invest in ___________.
bonds
Debenture Bonds (Unsecured Bonds)
bonds that are unsecured (i.e., not backed by any collateral such as equipment)
Convertible Bonds
bonds that investors can convert into shares of common stock in the issuing company
the accounting cycle relies on the work of whom? 2pts
bookkeeper; accountant
Summed up, what is debt financing?
borrowing money
A firm's cash budget flow include: 3pts
borrowing needs; short-term investments; operating expenses
A survey company used a dollar value to measure the ___________ of Ben and Jerry's Ice Cream, as compared to some of its worthy competitors. Essentially, the survey firm evaluated Ben and Jerry's by measuring net value of several components that would comprise the brand's perception and image to ice cream customers.
brand equity
The second step of Financial Planning is to develop an overall ____ to meet short-term and long-term financial needs.
budget
When a company allocated the use of specific resources thruout the firm based on a financial plan indicating management's expectations, then the company is using a(n) _____ as the basis for making decisions.
budget
Marketers are ___ customer ___ by: providing customers with excellent service; carefully listening to what customers wants; tracking customer purchases
building customer relationships
Priceline™ and Expedia™ are two online travel companies. Both are known to utilize ___________ of services such as "airline flights and hotel stays" to entice customers to purchase both at the same time, for a more reasonable price than what they would pay separately for each of these services
bundling
service business
business that carries out activities that are consumed by customers rather than offering products for sale. The newest are Internet service providers and web designers. These businesses are the fastest growing part of the U.S. economy
intrastate commerce
business trade within one state that is regulated by the state itself (under the 10th Amendment- -rights of states)
Summarized, how do cash flow problems start? 2pts
buying goods on credits and the money to pay the credit back is coming on a later date
Diversification
buying several different investment alternatives to spread the risk of investing
Although a firm may list a large dollar value of assets, how would a bank evaluate if the company was able to repay a loan?
by analyzing the firm's balance sheet and income statement
missed payment/paying late
can "knock off" 50 - 100 points from a credit score; this could stay on your credit score for seven years
career information sources
can include your school counselor, teachers, newspapers, online sources, neighbors, and even your own family members
Businesses that are not incorporated identify the investment of the sole proprietors thru the ____ account
capital
Q -A firm's spending plans for major purchases, such as manufacturing equipment or buildings, is detailed in the _____ budget
capital
Term for - what owners' equity is in firms where sole proprietors and partners it means the value of everything owned by the business minus any liabilities of the owner(s), such as bank loans
capital account
a(n) .... summarizes a firm's spending plans for major asset purchases that often require large sums of money
capital budget
Q - A firm that purchases a long-term asset such as a manufacturing facility is making a(n)
capital expenditure
Q - Most of the customers in Maleki's printing business pay him at the end of the month. However, his paper supplier demands payment upon delivery. In order to make sure that he has funds available to pay his supplier, Maleki should develop a ...
cash budget
Q - As a finance manager at AllSports Communication, Charlie worries about the firm's borrowing requirements for the upcoming year. He knows the benefits of estimating AllSports' cash disbursements and short-term investment expectations. Facing these concerns, a(n) _____ budget would provide Charlie with valuable information by providing a good estimation of whether the firm will need to do short-term borrowing. Why? 7pts
cash budget; a budget that estimates cash inflows and outflows (during a particular period like a month or a quarter) and helps managers anticipate borrowing needs, debt repayment, operating expenses, and short-term investments, and is often the last budget prepared.
A tool that may be used to provide additional information about the flow of money into and out of the company is the ...
cash flow forecast
Q - A(n) ___ is an estimate of the timing and amounts of cash inflows and outflows over a period of time so that financial managers can determine if the firm needs to borrow funds, how much it needs to borrow, and when -- and how--- it can repay the loan
cash flow forecast
Q - Tristan is the financial manager of a small company. While sales are steady, customers are taking longer to pay, and he has had increasing difficulty obtaining short-term loans to finance the day-to-day operations of the company. Tristan's company is facing a(n)
cash flow problem
The statement of cash flows reports cash receipts and cash disbursements that is not related to,,,,
cash generated thru the cost of goods sold (gross margin)
Taxes represent ____________.
cash outflow
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
Bubble
caused when too many investors drive the price of something unrealistically high
CPA 2pts
certified public accountant; an accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (#AICPA)
Investment Risk
chance that an investment will be worth less at some future time than its worth now
What are three management functions that public relations includes?
changing policies and procedures in response to public requests; executing programs of action and information to earn public understanding; evaluating public attitudes;
Characteristics of _______ include: uses various media and non-personal communication
characteristics of advertising
#PCAOB aka #Public-Company-Accounting-Oversight-Board 2pt
charged with overseeing AICPA; created by congress
Load Fund
charges investors a commission to buy or sell its shares
No-Load Fund
charges no commission
Unlike the market for shirts at the local department store, the market for securities can experience significant upswings and downswings in values, in the same day. Program trading allows for thousands of trades to occur simultaneously. To prevent large, sudden drops in value of securities markets, electronic systems rely on ______________ to temporarily close program trading.
circuit breakers
How does accounting differ from bookkeeping? 7pts
classifying and summarizing financial data provided by bookkeepers, and then interpreting the data and reporting the information to management. Also suggesting strategies for imporving the firm's financial condition and prepare financial analyses and income tax returns
Asking for the order and showing the client where to sign is known as ____ the sale
closing
3 key functions of financial management: ____ funds; managing ______; and controlling ____
collecting; taxes; funds
mixed economy
combines both command market economies
The term used for unsecured notes of $100,000 and up that are due in no more than 270 days is ....
commercial paper
The most basic form of ownership in a firm consists of ___________.
common stock
horizontal communication
communication that moves across the organization at the same level: employee to employee or manager to manager
vertical communication
communication that moves up and down in an organization between management and employees
(Step 3 establishing financial controls) what is the function of financial controls?
compare actual revenues, costs, and expenses with the projected ones in the budget.
Q - In the 1980s, soft-drink manufacturer Soda-Pahp ran a series of ads where people chose Soda-Pahp over Soda-Coke in a blind taste test. This is called ___ advertising
comparison
Up until now, Mac and Zac's Youth Sports Academy has served the ____________ market. Just recently, the local high school contacted Mac and Zac's inquiring about practice space for boys' baseball and girls' softball during bad weather. If Mac and Zac negotiate a contract with the high school, they will also be serving the ___________ market.
consumer; B2B
It is important for companies to build cooperative and transparent channel systems for moving goods, supplies, and services. Well-known fast food franchises usually set up _____________ systems, where individual franchise owners participate in channel cooperation through legal agreements.
contractual
The 3 needs for operating funds include:
controlling credit operations; making capital expenditures; acquiring needed inventory;
Managerial accounting is concerned with: (3pts)
controlling; measuring production costs; preparing budgets
The rate of return a company must earn in order to meet demands of its lenders and expectations of its equity holders is called the:
cost of capital
ldle Time Gaming, Inc. knows that its stockholders expect a return on their investment. The expected return that stockholders anticipate translates into the company's __________. Essentially, this is the amount that the investment funds are costing the firm.
cost of capital
cost of goods sold is also known as .......
cost of goods manufactured
What term describes the cost of merchandise the firm sells?
cost of goods sold
operating expenses
costs involved in operating a business, such as rent, utilities, and salaries
fixed expense
costs that occur regularly and are for the same amount each time they are paid (rent, car payment)
What does the #Sarbanes-Oxley-Act (#Sarbox) do?
created new govt reporting standards for publicly traded companies.
.... are a form of financing where the merchant accepts payment immediately from the bank and the customer agrees to repay the bank.
credit cards
Q - While best used as a last resort, many small businesses in need of short-term financing use
credit cards
revolving loans
credit cards, cell phones, department store credit cards (JC Penney); they are more risky because the debtor can control how much he pays each month
Accounts Payable
current liabilities or bills the company owes others for merchandise or services it purchased on credit but has not paid yet
Measurements of a firm's liquidity, debt, and assets could be created in a(n)...
current ratio
Focusing on long-term customer loyalty is called ____________.
customer relationship management
Viral marketing is a promotional tools that relies on ____ to say positive things about a product or company, which helps promote a particular product, brand, or company
customers
Concerning management influence in financing, having no authority unless special conditions have been agreed on is a sign of _____ financing
debt
Leverage ratios are used to understand how much the company relies on ______ to fund its operations
debt
A firm borrowing from an outside lender and borrowing cash on a short- or long-term basis is called
debt financing
A firm raising funds thru various forms of borrowing with the intent to pay it back is using _____
debt financing
Q - Acquiring funds thru borrowing represents:
debt financing
Q - The two primary forms of financing and equity financing and _____
debt financing
Through which means can companies raise capital?
debt financing & equity financing
Q - The two primary types of long-term financing are
debt financing and equity financing
What are four alternative sources of funding to raise?
debt financing; equity financing; short term financing; long-term financing
What are the main types of financial ratios used in ratio analysis? (4pts)
debt; activity ratios; profitability ratios; liquidity ratios
current liabilities
debts due in one year or less
long-term liabilties
debts not due for a year or more
Cash flow
defined as the difference between cash coming in and cash going out of a business
Independent Financial Accounting Standards Board (FASB)
defines the generally accepted accounting principles (GAAP) that accountants must follow
Other #operating-expenses that appear on an #income-statement are more complex e.g. _______
depreciation
___ is the systematic write-off of the cost of a tangible asset over its estimated useful life
depreciation
Marketers constantly require good information if they are to meet or exceed their customers' expectations. When performing marketing research, Mac and Zac's first step is to ______________.
determine the type of information (the question) they are seeking
An accounting system would not be used for...
determining the most profitable target market segment for the company's new product line
One of the ways that restaurants adapt their product offerings to address changes in competition is ____________.
develop new menu offerings
An advantage of global advertising is saving money. However, global advertising can have serious disadvantages such as: 3pts
difficulties creating one message for different cultures; language and culture differences; different buying habits in many countries
One of the fastest growing aspects of retailing is _________. Examples of firms that compete in this type of retailing are Lands End™ and L. L. Bean™, who both sell casual men's, women's, and children's clothing and accessories
direct marketing
_____ is the accounting practice of recording each transaction in two places in the accounting journal.
double-entry bookkeeping
Costs of goods sold compares how much a business ______ by selling merchandise and how much it _____ to make or buy the merchandise
earned; spent
an important tool for investors used in determining the value of a stock is the amount of net income that belongs to each share of common stock. this is called:
earnings per share (EPS)
Assets
economic resources (things of value) owned by a firm
assets
economic resources (things of values) owned by a firm, including goodwill
market economy
economy in which resources are privately owned, and people make decisions regarding production
command economy
economy in which the government makes all decisions regarding production; few personal choices; no luxury goods; fixed prices; fixed wages
Notes Payable
either short-term or long-term liabilities (like loans form bank) that a business promises to repay by a certain date
What are examples of a company's day to day operational costs?
employee salaries, supplies that people buy (like if its a coffee shop, cups and lids), rent and utilities
#financial-analysis begins where the #accounting #financial-statements _____
ends
The purpose of a trial balance is to...
ensure that the figures in the account ledgers are correct and balanced
A long-term forecasts allows top management to _____ where income is coming from as well as its future _____ potential
envision; profit
higher credit score
equates to a lower interest rate when you go to borrow money
A firm selling ownership in the company in the form of stock is using ________
equity financing
Issuing stock as a source of funding is referred to as ____________.
equity financing
Q - Peter wants to open a new manufacturing facility in Western Canada. Instead of securing bank loans to finance this venture, he sells shares of stock in his company. This is known as:
equity financing
With regard to repayment in financing, financing that has no repayment date is a sign of ....
equity financing
With regard to tax considerations in financing, the fact that dividends are paid from after-tax income is a sign of ________
equity financing
Land Banks
established to lend money to farmers
Q - Eduardo, the marketing director for a major retailer, prepared a unified message for the new promotional campaign. After several months, he noticed an increase in sales but realized he needed to compare the increase in sales against the cost of the campaign. Eduardo is .....
evaluating the effectiveness of the plan
What makes capital expenditures so important?
every business, big or small, will eventually have to confront them.
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
personal ethics
examples include "don't cheat on a test" and "don't steal"
professional ethics
examples include not "throwing" a game, not punching a time card for a co-worker, not using sub-standard building materials, and not using the company car or credit card for a family vacation
social ethics
examples include recycling and volunteering on behalf of others
temporary unemployment
examples include: you just quit your job; you just graduated; you are "between" jobs
Over-the-counter (OTC) stock
exchange that provides a means to trade stocks not listed on the national exchange
When Beck's Bicycles, Inc., started its specialty bicycle business, it became the luxury brand of world famous bikers, who competed in world class races and were known to only pursue their sport using state-of-the-art equipment. The best distribution strategy for a brand with this image would be _________ distribution.
exclusive
Yield
expected return on an investment (i.e. interest or dividends) usually over a period of a year
Short-term forecasts are based on ______________.
expected sales revenues and expenses
mentor
experienced employee who serves as a "counselor" to a person with less experience
Q - Patrick's lawn care business needs quick cash to purchase a new commercial lawn mower. Instead of getting a loan, he sells his accounts receivable for cash. This type of financing is know as ____
factoring
Q - Undercapitalization, poor control over cash flow, and inadequate expense control and three reasons firms:
fail
default
failure to make a loan payment when it is due
A stock price forecast is a part of a firm's cash flow budget. True/false
false.
What are some sources of short term funds (or short term financing)? 6 possible points
family and friends; taking advantage of trade credit; using commercial banks to obtain different forms of short-term loans; factoring accounts receivable; selling commercial paper; utilizing credit cards
Q - The business function that is responsible for acquiring funds for the firm and managing funds within the firm is called
finance
Inventory policies are need to ... 3pts
finance purchases; ensure products are available; and maximize profits
_____ accountants are involved in generating financial information and analysis for the company's creditors, lenders, customers, suppliers, and government agencies, and the general public
financial
a company's ______ statements summarize all of the transactions that have occurred over a particular period or point in time.
financial
The third step of Financial Planning is establishing _____ ____, which is the process of reviewing actual versus budgeted revenues and costs
financial controls
#income-statement reports ____ ____ over a period of time.
financial operations
Nonbanks
financial organizations that accept no deposits but offer many of the services provided by regular banks (pension funds, insurance companies, commercial finance companies, consumer finance companies, brokerage houses, and corporate financial services - like GE Capital)
Financial management primarily involves managing a firm's:
financial resources
balance sheet 4pts
financial statement that reports a firm's financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners' equity
statement of cash flows
financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing.
A company's ________ summarize all of the transactions that have occurred over a particular period or point in time
financial statements
Accounting reports and ____ ____ are critical to understanding the health of a business
financial statements
Buying and selling goods and services, acquiring insurance, paying employees, and using supplies are all examples of:
financial transactions
what are the buying and selling goods and services, acquiring insurance, paying employees, and using supplies?
financial transactions
Short-term funds should be used for: 3pts
financing current inventory; cash flow problems; monthly expenses;
One advantage in using retained earnings as a long-term source of funds is __________.
firms avoid having to make dividend payments to stockholders, or interest payments to bondholders
Converting the firm's inventory to profits is a key _____ of management
function
___ are administrative expenses of the firm such as office salaries, depreciation, insurance, and rent
general expenses
GAAP
generally accepted accounting principles that accountants must follow;
manufacturer
gets supplies from other producers and converts them into products
Program Trading
giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses
Some products and services lend themselves to ______________ better than others. For example, youth in Southeast Asia, youth in Bosnia, youth in Alaska, and youth in Brazil may desire the same products, in the same form.
global advertising
Assets includes _____
goodwill
Small Business Administration (SBA)
government agency that helps small business owners develop business plans and obtain financing and other support for their companies
Food and Drug Administration (FDA)
government agency that protects consumers from dangerous or falsely advertised goods; ensures proper label and warnings; tests new drugs, foods, and cosmetics
Occupational Safety & Health Administration (OSHA)
government agency that sets and enforces work-related health and safety standards
The risk/return trade of principle means that the greater/lower the ____ a lender makes in making a loan, the _____ the interest rate
greater; risk; higher
A financial plan is important to business because it:
greatly increases the firm's chance of success
A company's net sales minus cost of goods sold is called:
gross profit
Net Sales
gross sale minus returns, discounts, and allowances
____ refers to the total of all sales the firm completed
gross sales
net sales
gross sales minus returns, discounts, and allowances
installment debt
having more of this kind of debt versus revolving (credit cards) will help your credit score
Marketing is as much about helping sellers sell products and services, as it is about __________.
helping buyers buy
#basic-earnings-per-share-ratios (#basic-EPS)
helps determine the amount of profit a company earned for each share of outstanding common stock
Junk Bonds
high-risk and high-interest bonds
Speeder conversion of cash means _______ liquidity
higher
The more efficiently a firm sells or turns over its inventory, the ___ its revenue
higher
The _____ the risk of failure or loss in an industry, the higher the return investors expect on their investment; they expect to be well compensated for shouldering such odds
higher;
Gross Profit (Gross Margin)
how much a firm earned by buying (or making) and selling merchandise
gross profit or gross margin 2pts
how much a firm earned by buying (or making) and selling merchandise; #cost-of-goods-sold - #net-sales
What wouldn't be a long-term question that a financial manager would ask regarded long-term financing?
how much long-term funding will be needed to meet the monthly payroll
Liquidity
how quickly you can get back your invested funds in cash if you wan tor need them
What do financial controls allow managers to see?
how the company is meeting its fiscal objectives and achieving milestones
Tax Consequences
how the investment will affect your tax situation
Q - The first step in a promotional campaign is to ....
identify a target market
Cumulative
if one or more dividends are not paid when promised, they accumulate and the corporation must pay them in full at a later date before it can distribute any common stock dividends
#income-statement determines...
if the company is profiting or losing
Questions external users ask like ¨is the organization profitable?¨ or ¨how much debt is owed is answered where?
in the annual report
#double-entry-bookkeeping requires entries where? 2pts
in the journal and the ledger
4 P's of Marketing
include the following elements: product, place (distribution), price, and promotion
entrepreneurship advantages
include the personal satisfaction of knowing your "risks" and "innovative ideas" paid off. You're doing something you like; can often work from home with flexible hours
entrepreneurship disadvantages
include you are 100% liable/responsible for the business; the financial risks are yours alone. Despite confidence, clever ideas, and skills, most fail because the owner runs out of money
seasonal unemployment
includes ski-lift operators, caddies, lifeguards, and landscapers
The _________ shows all of a firm's revenues, costs, and whether it made a profit or loss during a specific period.
income statement
The financial statement that summarizes the revenue and expenses and resulting net income (or loss) over a specified time period is called the .....
income statement
The three key financial statements prepared by accountants are the balance sheet, the statement of cash flows, and the ....
income statement
Which financial statement shows the firm's profit after costs, expenses, and taxes?
income statement
#Dodd-Frank-Wall-Sreet-Act
increased financial regulation affecting accounting by increasing the power of #PCAOB (#Public-Company-Accounting-Oversight-Board) to oversee auditotrs of dealers in securities markets.
The term of the bond (interest, repayment, date, etc) are called
indenture terms
An evaluation and unbiased opinion of the accuracy of a firm's financial statements can be obtained after a _____ ____
independent
An average of the cost of 30 industrial stocks, the purpose of the DOW Jones Industrial Average is to ___________.
indicate the movement [up or down] of the stock market, in general
return on equity
indirectly measures risk by telling us how much a firm earned for each dollar invested by its owners.
expert influence
influence that arises when group members recognize that the leader has special expertise in the area
reward influence
influence that results from a leader's ability to give or withhold rewards like raises, new job benefits, praise, and recognition
identity influence
influence that stems from the person trust and respect members have forthe leader
What are some benefits of using computers of accounting purposes? (3pts)
information can be posted from journals instantaneously; computers can handle large amounts of financial information; software can help if no strong accounting support is available;
Q - In order to raise funds, Nickelson.com has decided to sell shares of its stock for the first time to the general public. This is known as a (n) _____ and its acronym is____
initial public offering (IPO)
Crucial elements in the ___ ___ ___: start a business relationship; friendly professionalism; create rapport (a relationship esp one of mutual trust or emotional affinity)
initial sales approach
A certified management accountant (CMA) must be certified by the Institute of Certified Management Accountants and provides information to managers _______ the organization
inside
Q - An example of undercapitalization would be
insufficient funds to pay operational expenses
Q - The goal of Carol Islind is to design a comprehensive strategy that unifies advertising, personal selling, public relations, and sales promotion activities creating a consistent message. This effort to promote a positive brand image represents a(n) ... program
integrated marketing communication
When using various forms of promotion to carry the promotion message, it is important that the recipients of the message interpret it in the same way. Creating a unified promotional message, where potential customers perceive the same message, whether it is in a TV commercial, or on a billboard, or in an online blog is called ____________.
integrated marketing communication
You can find Coca-Cola products in discount stores, grocery stores, convenience stores, and even vending machines. Coca-Cola practices _______________ distribution with its product lines. selective
intensive
Beck's Bicycles, Inc., purchases its wheels from a Southeast Asian company. The supplier sends the goods via ship, with the Port of Los Angeles as its destination. From there the wheels are shipped via rail to Chicago, Illinois, where they are loaded onto a truck for their final destination to Beck's assembly plant on the east coast. Beck's uses _________ shipping to transport its goods.
intermodal
private accountants often perform ___ audits while public accountants also conduct _____ audits
internal; independent
Equity financing uses funds raised _____ (from _____) or through selling ownership (selling _____) to provide a company with an influx of cash
internally; operations; stock
Consumer Bill of Rights
introduced by President Kennedy in 1962, it lists our seven rights as consumers: (1) the right to be informed, (2) the right to safety, 3) the right to choose, (4) the right to be heard, (5) the right to a remedy (sue. Complain), (6) the right to consumer education, and (7) the right to service
________________ measures the speed with which inventory moves thru the firm and gets converted into sales
inventory turnover ratio
Index Funds
invest in certain kinds of stocks or bonds or in the market as a whole
______ are cash used in or provided by the firm's investment activities.
investments
withholding tax payments
involve a "pay-as-you-go" system where money is deducted from each pay and "held" for you by the government
impulse buying
involves buying goods quickly without much though; can lead to a ruined credit rating; these goods are often placed near cash registers/ check -out lanes
internship
involves work experience in an organization while learning about a career field
account recieveable
is an amount of money owed to the firm that expects to receive within one year
bankruptcy
is considered the "last resort"; it is the legal process of reducing or eliminating an amount owed
demand curve
is downward sloping (think D = Demand)
Backstreet Books, Inc., an eclectic book and music store near a large college campus, is a reseller. The operation buys books almost every day. Deliveries are constantly part of the day-to-day operation of the firm. The transportation company that delivers to Backstreet Books provides this service on trade credit terms of 3/5, net 30. This means the firm ___________.
is offered a 3% discount if it pays during the first 5 days. The entire bill is due in 30 days
Federal government
is the country's largest employer and the largest consumer of goods and services
supply curve
is upward sloping
The financial manager for Bellandro Bay Brewery is working with the firm's marketing department to bring out a new line of pumpkin ale. The new product development and subsequent production will require a long-term investment of funds by the company. Which of the following sources of financing would be representative of such a funding requirement?
issuance of bonds
(Step 3 establishing financial controls) Why is financial control so important?
it guarantees that the various departments and managers within a company will actually follow the budget
Why are the IRS, stockholders, banks, etc very interested in the financial statement?
it indicated the companys' health
What are three true facts about trade credit?
it is the most widely used source of short-term funds; it is used by large and small businesses; it is usually more convenient than bank loans
Q - An advantage of publicity is that ....
it reaches people who might no read ads
personal assets
items of value such as a home, money in the bank, a car, jewelry, and a coin collection
tax deductions
items such as charitable contributions, losses due to theft/fire, and union dues, which will reduced your taxable income
Current Assets
items that can or will be converted into cash within one year; include cash, accounts receivable, and inventory
Financial data from transaction documents are first recorded in a(n) _____. The data are then transferred into a(n) _____, so managers can find all the information about a single account in one place.
journal; ledger
A store that sells a huge variety of one type of product such as books, in order to dominate that category is called a category _________ store
killer
Institutional Investors
large organizations - such as pension funds, mutual funds, and insurance companies - that invest their own funds or the funds of others
A tax accountant has specialized and learned tax _______ and is responsible for preparing tax returns.
law
Sarbanes-Oxley Act (Sarbox)
legislation that created new government reporting standards for publicly traded companies
The primary users of government and not-for-profit accounting information are: (3pts)
legislative bodies; citizens; special interest groups
Duration
length of time your money is committed to an investment
follow-up letter
letter that expresses appreciation for the opportunity to interview for a job
cover letter
letter that expresses your interest in a specific job and requests an interview
Darby's boss asked her to determine if the company is operating with too many borrowed funds. Which ratio will Darby utilize to help her with her decision?
leverage
Raising needed funds thru borrowing to increase a firm's rate of return is called ____
leverage
Raising needed thru borrowing to increase a firm's rate of return is called ____
leverage
Debts owed by a business are called _____
liabilities
The part of the business that belongs entirely to the creditors is called:
liabilities
The major accounts on the balance sheet include: (3 pts)
liabilities; owners' equity; assets
Closed-End Funds
limit the number of shares; once the fund reaches its target number, no new investors can buy into the fund
Marco's Italian Gardens, an authentic restaurant in suburban Chicago, worked with a local bank for a _____________. This unsecured source of funds was available for Marco to tap into if he needed immediate funds for the business. He liked the fact that he had a cushion and only used it if he fell short of funds.
line of credit
Unsecured, short-term funds a bank will lend to a business, provided the funds are readily available, is called ....
line of credit
When a company is approved for unsecured, short-term funds to be lent from a bank, provided the funds are readily available, the company has applied for a _______
line of credit
accounts receivable are considered a _____ _____ b/c they are easily converted
liquid asset
The measure of how quickly an asset can be converted to cash is referred to as its...
liquidity
____ refers to how quickly an asset can be converted to cash
liquidity
The four key types of ratios that investors monitor are....
liquidity ratios; profitability ratios; leverage ratios; activity ratios
QE 1 and QE 2
literally mean quantitative easing one and two, but the real meaning is that the Fed is creating more money because it believes that money is needed to get the economy moving again
variable expense
living costs involving different amounts each time they are paid and may not be easy to estimate. Examples include groceries, gasoline, clothing, and medical costs
Q - If a firm is financially sound and has a long-standing relationship with a bank, the bank may extend unsecured short-term loans to the firm. This type of arrangement is called a(n)
long of credit
Fixed Assets
long-term assets that are relatively permanent such as land, buildings, and equipment
Intangible Assets
long-term assets that have no physical form but do have value - patents, trademarks, copyrights, and goodwill
___________ financing should be used for projects or equipment that will be utilized over a period of longer than one year, usual up to ten years
long-term financing
A _____ can be used as a base for a company's strategic plans.
long-term forecast
What is the meaning of bonds payable?
long-term liabilities that represent money lent to the firm that must be paid back
bonds payable
long-term liabilities that represent money lent to the firm that must be paid back
Bond Payable
long-term liabilities; money lent to a firm that must be paid back
Collins Enterprises is building a new manufacturing facility and has taken out a 30-year mortgage with Frontier Financial in the amount of $350,000 to finance his project. This mortgage would be shown as a(n) ______ _______ on the company's balance sheet.
long-term liability
(Lower/higher) than average #inventory-turnover-ratio often indicates obsolete merchandise or poor buying practices
lower
Items that may back a secured bond include: 2pts
machinery and equipment; real estate
What are 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
The area of accounting that provides financial information and analysis to managers within the organization to assist them in decision making is called ____ accounting
managerial
_________ accounting is used to provide information and analysis to managers within the firm to assist in decision making.
managerial
Managers need information to make decisions. Which type of information arranges this data in such a way?
managerial accounting
The area of accounting that provides information to managers inside the organization to assist them in decision making is called:
managerial accounting
The five key working areas of accounting:
managerial accounting; financial accounting; auditing accounting; tax accounting; government and not-for-profit accounting
Secondary Markets
market that handles the trading of these securities between investors, with the proceeds of the sale going to the investor selling the stock, not the corporation whose stock is sold
The channel of distribution consists of ___________, who provide transportation and storage of goods as they are distributed from producers to ultimate consumers
marketing intermediaries
Once Mac and Zac have a better understanding of the kinds of baseball skills that local youth want to acquire, they can begin to prepare the ________________.pricing structure
marketing mix
Primary Markets
markets that handle the sale of new securities
Callable
means preferred stockholders could be required to sell their shares back to the corporation
A prospect will have: 3pts
means to buy a product; willingness to listen to a sales message; authority to buy a product;
Liquidity Ratios
measures a company's ability to turn assets into cash to pay its short-term debts (liabilities that must be repaid within one year)
Costs of Goods Sold (Costs of Goods Manufactured)
measures the cost of merchandise the firm sells or the cost of raw materials and supplies it used in producing items for resale
Stock's Beta
measures the degree of the stock's risk
#inventory-turnover-ratio
measures the speed with which inventory moves thru the firm and gets converted into sales
what is managerial account concerned with? 3pts
measuring and reporting costs of production, marketing, and other functions; preparing budgets (#planning); checking whether or not units are staying within their budgets (#controlling); and designing strategies to minimize taxes.
About 80% of all wholesales are _______________. They typically are independent companies that take title to goods that they resell to retailers
merchant wholesalers
Volvo is a well-known quality manufacturer of cars, trucks, and SUVs. Volvo dealers also provide financing to their customers. These products and services are part of Volvo's product _____________.
mix
Finance is the function of acquiring and managing _____
money
Q - When financial managers refer to the ¨time is money,¨ they mean that .... and why?
money earning interest increases in value over time; Time value of money is the concept that money available at the present time is worth more than the same amount in the future due to its potential earning capacity (interest)
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, certifications of deposit, etc.)
long-term financing
money needed for the important resources of a business, such as land, buildings, and equipment, that will last for many years
short-term financing
money needed to pay for the current orating activities of a business
M-1
money that can be accessed quickly and easily (coins and paper money, checks, traveler's checks, etc.)
One of the consequences of the financial crisis of the late 2000s was __________.
more government scrutiny and regulations
Personal selling, as a form promotion, differs when the effort is a B2B (business to business) sales effort rather than a B2C (business to consumer) sales effort. B2B personal selling requires ______________.
more prospecting and qualifying
Commercial finance companies take ____ risks than banks and charge ___ interest rates
more; higher
Subprime Loans
mortgages that are given to low- and moderate- income buyers, many with weak credit scores or no verification of income or assets
A certified management accountant:
must pass a qualifying exam and be certified
ABC Investment Company sells shares of _______________ to the general public. ABC's investment managers buy an assortment of stocks and bonds and then repackage them into a new product. The company then sells shares of the new product.
mutual funds
In an interactive promotion buyers and sellers work together to create ... exchange relationships
mutually beneficial
Bear Market
name given to the market when stock prices are declining steadily
_____ income after taxes is the last line on the income statement
net
#net-income-before-taxes is also known as (2pts)
net earnings or net profit
Return on sales is: (equation)
net income divided by net sales
The bottom line is another name for:
net income or loss
If there is no #cost-of-goods-sold then _____ could = #gross-profit (gross margin)
net sales
Fountain of Youth Tea Company changed their glass bottles to streamlined thermos- like, blue sports bottles that fit nicely on bicycles and in car holders. A packaging innovation such as this is often perceived by the buyer as a _____________.
new product
Idea generation represents the first stage of _______________.
new-product development
Upscale retailers, such as Nordstrom's, feature customer service as their significant point of difference and use that difference to compete with less expensive stores. This is known as ___________ competition.
nonprice
Credit Unions
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
Where does the information that financial accountants generate go to? (name a few of the 10 examples)
not only company owners, managers, and employees, but also to creditors and lenders, employee unions, customers, suppliers, government agencies, and the general public
what is an auditors job?
not only examine the financial health of an organization but also its operational efficiencies and effectiveness.
Q - Financial managers follow a step-by-step process of financial management... t/f
not true
_____ payable can be either short-term or long-term liabilities that a business promises to repay by a certain date.
notes payable
Municipal Bonds
offered by local governments and often have advantages such as tax-free interest
department store
offers "high-end" merchandise and can emphasize service such as personal shoppers. Examples include Macy's and Nordstrom.
discount store
offers low prices and "help yourself" shopping; examples include Kmart and Wal*Mart
multi-purpose card
often referred to as a "bank card" and is very popular around the world. Examples include VISA and Master Card
capacity
one of the "C's" of credit, it involves "How easily can you pay off the debt? Do you have a steady job, good income, and little debt?"
credit history
one of the "C's" of credit, this is concerned with whether or not you pay your bills on time and how much debt you currently have
collateral
one of the "C's" of credit, this is property offered as security for some loan agreements
capital
one of the "C's" of credit, this is the value of your possessions: what you own
character
one of the "C's" of credit, this refers to a person's ability to pay a debt when it is due
television
one of the most effective means of advertising
Rent, salaries, supplies, utilities, and insurance are examples of ______ expenses that are general expenses
operating
____ funds are typically needed to manage day-to-day needs of a business as well as acquiring needed inventory
operating
Q - Although Naomi's business is small, she knows that she still needs to develop an accurate estimate of the costs and expenses needed to run the business. In order to do this, Naomi develops a(n) ...... 1pt ... Why? 2pts
operating budget; the operating budget shows how much the firm plans to spend on advertising, travel, salaries, rent, and all of the other necessary costs and is often the most detailed and useful budget to companies of all sizes
What are some things that would be shown on an income statement? (4pts)
operating expenses; revenue; net income; cost of goods sold
The statement of cash flows reports cash receipts and disbursements related to ______, investments, and financing
operations
The major activities of a firm shown on the statement of cash flows include: (3pts)
operations; investments; financing
Q - What is not typically a job of a financial manager? why?
ordering supplies for production; Since finance has such a huge definition (that's probably worth learning), financial managers serve many roles, but ordering supplies for production is usually not one of them.
International Monetary Fund (IMF)
organization that assists the smooth flow of money among nations
Governmental Accounting Standards Board (GASB)
organization that sets the government accounting standards
A short-term forecast is not only a prediction of sales but rather ...
other costs associated with doing business
According to the fundamental equation, the value of assets the firm owns equals the amount of money the firm owes to others plus .....
owners' equity
stockholders' equity or shareholders' equity is also known as
owners-equity
Dividends
part of a firm's profits that the firm may distribute to stockholders as either cash payments or additional shares of stock
A term-loan agreement is a promissory note that requires the borrower to: 2pts
pay interest on a loan; pay specified amount in installments
Common financial transactions include: (3pts)
paying employees; acquiring insurance; buying and selling goods
On the statement of cash flows financing activities would include: (3pts)
paying past debt; taking on new debt; paying dividends
credit score components
payment history is the most important factor because it shows a lender how well you have paid your loan(s)
human resources
people who produce goods and services
What are not key activities of finance? 2pts
performing cash flow analysis; creating sales forecasts
Callable Bonds
permits the bond issuer to pay off the principal before its maturity date
Q - Making a sales pitch to a potential customer is an imporant part of ...
personal selling
Q - ____ refers to face-to-face presentation and promotion of goods and services. This also includes searching for prospects and providing follow-up services.
personal selling
When Fountain of Youth Tea Company strategized on how to distribute its product to customers, it elected to first start offering it through high-end grocery stores. The company essentially added ______________ utility to the distribution process
place
What are three key activities of finance?
planning for major expenditures of funds; performing cash flow analysis; preparing budgets
influence
power enabling a person to affect the actions of others
Mark was trying to decide between purchasing the common stock shares of AMEREN-UE stock (a utility company), or preferred shares of the same company. As a student of business, you provide the following accurate information that ___________.
preferred shareholders typically do not have voting rights. Companies are obligated to pay preferred shareholders their dividends, before paying dividends to common stockholders
Accounting is the ____ and ____ of data and financial statements that others _____ and _____ the firm use to make decisions.
preparation and recording; inside and outside
Tyler works as an accountant for a mid-sized retail store. He has just completed a successful trial balance. Tyler's next task is likely to be...
preparing the store's balance sheet and other major financial statements
Explaining the benefits of a product feature is part of the _____ in a sales processs
presentation
Two baseball leagues in the city, where Mac and Zac plan to open a youth sports academy, agreed to allow Mac and Zac to distribute an email survey to their league players. In order to capture this opportunity, Mac quickly put together a set of 15 questions that inquire about the type of skills (batting, pitching, fielding, running) that league players want to develop. The survey and subsequent information this research would glean is called ________________ data.
primary
ethics
principles of morality or rules of conduct
GAP jeans are sold exclusively at GAP stores. This is an example of a(n) _________ brand.
private
what guarantees that the organization is carrying out proper #accounting procedures and financial reporting?
private accountants
What term defines each definition? ___= advertising for a good or service to create interest among consumer, commercial, and industrial buyers ___= advertising to consumers by various retail stores such as supermarkets and shoe stores ___= advertising that reaches people on their cell phones ___= advertising messages that appear on computers as people visit different websites ___= advertising that supports a particular view of an issue. Such advertising is aka **________**
product advertising; retail advertising; mobile advertising; online advertising; advocacy advertising aka cause advertising;
Q - One possible promotion strategy is to arrange with TV or movie producers to have a product appear favorable in a TV show or movie (such as a box of cereal prominently appearing in the TV show) This type of promotion is called ...
product placement
While doing an online search for a music venue, Darcy ran across a performance of well-known entertainer Lady Gaga that featured her hair neatly wrapped in Coca-Cola™ cans. The venue did not visibly identify the sponsor in any other way. Marketers would categorize this form of advertising as _________________
product placement
While doing an online search for a music venue, Darcy ran across a performance of well-known entertainer Lady Gaga that featured her hair neatly wrapped in Coca-Cola™ cans. The venue did not visibly identify the sponsor in any other way. Marketers would categorize this form of advertising as _________________.
product placement
complement
products that are used together such as toothpaste and a toothbrush
#profitability-ratios relate to ___ which is vital to the growth of a company. Thus #profitability-ratios are such closely watched measurements of company growth and management performance
profit
What type of ratios measure how effectively a firm is using its various resources to achieve profits?
profitability (performance) ratios
_____ measure how effectively a firm's managers are using its various resources to to achieve profits
profitability (performance) ratios
One of the four Ps of marketing encompasses all the techniques sellers use to motivate people to buy their products and it is referred to as ______
promotion
Q - The goal of ____ is to inform and remind people in a target market about specific products, eventually persuading them to participate in an exchange.
promotion
The Internet serves to assist interactive _____ of products which aids firms in establishing relationships with customers
promotion
Q - Nothing Rhymes with Orange, a natural fruit juice company, relies heavily on consumer advertising, publicity, and product sampling. These elements make up Nothing Rhymes with Orange's .....
promotion mix
If the sender in a non-personal, paid promotion is identified, we define it as advertising. If the sender is not readily identified, we label it ____________.
propaganda
Researching to find potential buyers is the first step in the selling process called .....
prospecting
When a salesperson identifies a potential buyer, the salesperson is _____
prospecting
Most of the financial information about an organization is based on information generated from accounting records. The reports and financial statements prepared by accountants... (1pt)
provide information that can be used by decision-makers both inside and outside the organization
statement of cash flows
provides a summary of money coming into and going out of the firm & It tracks a company's cash receipts and cash payments highlights the difference between cash coming ing and cash going out of a business
National Credit Union Administration (NCUA)
provides up to $250,000 coverage per individual depositor per institution
Market segmentation is about dividing the total market for a product or service into groups with similar characteristics and needs. Marketers often divide the total market for their products and services demographically, either by age, education, or income level. If they wanted to know if all 18-year-old in their market had similar TV show interests, their inquiry would also focus on _____________ segmentation.
psychographic
Q - Smith & Smith's Campaign for the Future of Nursing has resulting in over 500,000 people entering the nursing field in the past 5 years. This is an example of a(n) .... campaign
public relations
When Beck's Bicycles, Inc. volunteered to send its expert riders up mountainous terrain to rescue a lost dog that was unable to free himself from a cliff, it received accolades not only from other bicyclists, but from the public in general. Beck's marketing director insisted that the company show a video of the search and rescue on its social media site and on-line advertising. The effort quickly turned into an important _____________ campaign for the firm.
public relations
Q - An example of sales promotion is not ....
publicity
Q - ____ refers to any information about a product or an organization that is communicated to the public thru the media and is not paid for or controlled by the sponsor
publicity
Q - One of the most successful promotional campaigns implemented by pharmaceutical companies began in 1996 and involved switching the focus of promotion from doctors and pharmacists to consumers. In this instance, the pharmaceutical industry used a ____ strategy to crease profits
pull
The promotional strategy in which heavy advertising and sales promotion efforts are directed toward consumers so that they will request products from retailers is known as a ___ strategy
pull
When Fountain of Youth Tea Company (FYT) wanted to secure shelf space in high-end grocery stores, it found that it had a lot of competition. In order to get the attention of retailers, FYT directed its promotion toward the consumer who desired a refreshing tea drink, as opposed to carbonated beverages. Due to a successful campaign, it compelled the grocers to feature it in the stores. FYT used _______ strategy
pull
This promotional technique is aimed directly at the customer through heavy advertising and sales promotion efforts with the objective of getting consumers to demand a particular product at their local retailer or seek it out online =
pull stategy
The formula for the costs of goods sold:
purchase price + freight charges + storage costs
Buying Stock on Margin
purchasing stocks by borrowing some of the purchase cost from the brokerage firm
Q - The main objective of push strategies directed at wholesales and retailers is to ....
push the products down the distribution channel toward the final consumer
promotional strategy in which the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise ____ing thru the distribution system to the stores, is called (2pts)
pushing; push strategy
credit scores
range from 300 - 900; this is the number used to assess the risk of the borrower
Government and not-for-profit accounting involves working for organizations whose purpose is to serve: (2pts)
ratepayers; taxpayers
What is the major value of ratio analysis to the firm?
ratio analysis provides the firm with information about its financial position in key areas for comparison to other firms in its industry and its own past performance.
Activity Ratio
ratio that determines how effectively management is turning over inventory
Basic EPS (Earnings Per Share) Ratio
ratio that helps determine the amount of profit a company earned for each share of outstanding common stock
Return On Equity
ratio that indirectly measures the risk by telling us how much a firm earned for each dollar invested by its owner
Probability (Performance) Ratios
ratio that measures how effectively a firm's managers are using its various resources to achieve profits
Diluted EPS Ratio
ratio that measures the amount of profit earned for each share of outstanding common stock, but also considers stoic options, warrants, preferred stock, and convertible debt securities the firm can convert into common stock
Acid-Test or Quick Ratio
ratio that measures the cash, marketplace securities (such as stocks and bonds), and receivables of a firm, compared to its current liabilities
Leverage (Debt) Ratio
ratio that measures the degree to which a firm relies on borrowed funds in its operations
Debt To Owner's Equity Ratio
ratio that measures the degree to which the company is financed by borrowed funds it must repay
Inventory Turnover Ratio
ratio that measures the speed with which inventory moves through the firm and gets converted into sales
Return On Sales
ratio that tells us whether the firm is doing as well as its competitors in generating income from sales
natural resources
raw materials used to produce goods and services like land, oil, minerals, and trees
Q - Gennifer accepted a public relations jobs with a manufacturing company. Her first step in developing the company's new PR program will be to.....
reach out to the stakeholders to learn if their needs are being met and how the company can improve
Companies can sell commercial paper on their _____ ______
receivable
One of the main duties of bookkeepers is to...
record business transactions in journals
The data are... (3pts)
recorded, classified, and summarized
it doesn't matter when a firm places a particular item in its inventory, but it does matter how an accountant _____ the cost of the item when the firm sells it
records
Gross Sales
refers to the goal of all sales the firm completed
interstate commerce
regulated by the FTC, this is business trade that crosses two or more state borders
Statement of Cash Flows
reports cash receipts and cash disbursements related to the 3 major activities of a firm
balance sheet 2pts
reports the firm's financial condition on a specific date & details what the company owns and owes on a certain day
As long as they do not __________, manufacturer's agents can represent several manufacturers in a specific territory
represent competing products
Goodwill
represents the value attached to factors such as a firm's reputation, location, and superior products
goodwill
represents the value attached to factors such as reputation, location, and superior products
Government and not for profit accounting is an accounting system ______ by federal, state, and local governments
required
capital resources
resources that include tools, machinery, equipment, factories, and money
Service utility is rapidly becoming the most important utility for many ________ as they face competition from direct marketing, such as the Internet or catalogs.
retailers
Not paying dividends to your shareholders; These undistributed profits are referred to as...
retained earnings
Profits the company keeps and reinvests in the firm are called:
retained earnings
Q - Even while the economy experienced a relatively harsh recession, TEVECOM reported $130 million in net income. At the company's board of directors meeting it was decided that TEVECOM would distribute $50 million in dividends to its stockholders. The remaining $80 million became .....
retained earnings
Term for - the accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends
retained earnings
The most common source of meeting long-term capital needs it:
retained earnings
Examples of profitability ratios include: (3pts)
return on equity; basic earnings per share; return on sales
Examples of profitability ratios include: (3pts)
return on sales; basic earnings per share; return on equity
net income or net loss
revenue left over after all costs and expenses including taxes are paid.
A short-term forecast allows a company to predict the short-term ___, ___, and _____ during the next week, month or year.
revenues, costs, and expenses
Financial control is a process thru which a firm periodically compares its budget to what three items?
revenues, expenses, costs
Auditing
reviewing and evaluating the information used to prepare a company's financial statements
A line of credit that is guaranteed but usually comes with a fee is called ...
revolving credit
A line of credit that is guaranteed but usually comes with a fee is called:
revolving credit
A line of credit that is guaranteed but usually comes with a fee is called a
revolving credit agreement
Although ___ is a part of revenue, one must not confuse them.
sales
the inputs to an accounting system include.... (2 pts)
sales documents; other documents
A marketer trying to stimulate consumer purchasing and dealer interest by means of short-term activities is likely to use ..... as an incentive.
sales promotion
Q - Frequent shipper programs are intended to get customers to return to the store again and again. This is an example of ...
sales promotion
Q - The promotion mix consists of four tools: advertising, personal selling, public relations, and.....
sales promotion
The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities is known as .....
sales promotion
the #promotional-tool that stimulates consumer purchasing and dealer interest by means of short=term activities, such as displays, trade shows, and exhibitions, event sponsorships, and contests, is called
sales promotion
When Marmalade's Cupcake Closet is not jammed with happy customers, one or two of its sales associates stand out front and provide tastes of Marmalade's sumptuous goodies, in the form of miniature-sized treats. The company owners know that ________ is a very powerful form of promotion.
sampling
3 advantages of using a credit card in small business financing include that it:
saves times and its convenient; provides a line of credit; saves embarrassment form a bank turn down
When marketers advertise to reach the people they most want to reach, using an online ... is very advantageous
search engine
Q - A loan backed by collateral is called a(n)
secured loan
What are 5 different forms of short-term loans?
secured loan; unsecured loan; line of credit; revolving credit agreement; loans from commercial finance companies
If a push strategy is successful, the consumers are more likely to find out about a new product after:
seeing it in stores
#operating-expenses can be classified as ___ or ___ expenses
selling or general
Summed up, what is equity financing?
selling ownership of the company thru shares of stock or by earning profits
Selling a Bond at Discount
selling the bond at a price that is less than the bond's face value
specialty store
sells a limited line of goods; examples include Mrs. Fields Cookies, Jared Jeweler, and ACE Hardware
outlet store
sells name-brand, high-quality (often discontinued) products at low prices. Stores include Tanger, Birch Run, and Great Lakes Crossings
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
What are two examples of inputs to the accounting system?
shipping documents; sales documents
Products that the consumer buys only after comparing value, quality, price, and style from a variety of sellers are known as ____________ goods and services.
shopping
Q - What kind of financing would the following situation require? - Madeleine's Fashions plans to add inventory in its retail store just before the holiday season.
short-term financing
(Elements of financial planning, **DO NOT let this confuse the financial planning steps***) A financial plan is to ____ & ____, leading into the Operating (master) budget) which is to ___ ___ & ___. Then _____ leads back to the financial plan, starting the financial plan all over again
short-term forecasting; long-term forecasting; capital budget; cash budget; financial control; feedback;...**DO NOT let this confuse the financial planning steps***)
short-term financing should be used for what kind of needs?
short-term needs
notes payable
short-term or long-term liabilities that a business promises to repay by a certain date
Lauren is heading home from work and realizes she forgot to buy cat food during her lunch hour. As she navigates the traffic, she tries to decide where it will be most convenient to stop. She could go to the large discount store, which would give her the best price, but the lines are usually long after work. There are a couple of convenience stores on her route, but she isn't certain they will have her cat's brand. The grocery store is no better than the discount store after work. She settles on one of the drug store chains that also has just about everything. It is larger than the convenience stores, but never as crowded as the grocery store or discount store. In terms of consumer behavior, _____________ influences have guided Lauren's decision
situational
Blogging can be a strong promotional tool, esp for ....., bc of its low costs.
small businesses
The Credit Card Responsibility Accountability and Disclosure Act of 2009 did very little to protect ___________ from increases in credit card interest rates and fees.
small businesses
Q - It is especially important for small firms to have good financial management b/c:
small firms typically do not have adequate money for a financial cushion
A fast growing form of media for the delivery of advertising messages is __________. Some firms boast that they have several million followers on Twitter™ and Facebook™ accounts.
social media
scarcity
society's shortage of resources, which is a problem that all countries face
Recently, Mac and Zac's Youth Sports Academy has had several inquiries about girls' softball. While scanning the ____________ environment in their service area, Mac and Zac become aware of the growing importance of girls' sports, and particularly girls' softball. Girls' softball received a boost in the local market when the high school team won the state championship. Mac and Zac are seriously considering expanding their operation to include skill lessons for young girls
sociocultural
co-signer
someone who agrees to be responsible for payment of a loan if you do not pay as promised
consumer
someone who buys/uses goods and services
farmer
someone who cultivates land and uses other natural resources to grow crops and raise livestock for consumption
entrepreneur
someone who is willing to take a risk in starting a business to earn a profit; has special skills, abilities, innovative ideas, is persistent and optimistic; good examples include gift shop owner and restaurant owner
Mutual Fund Managers
specialists who pick what they consider to be the best stocks and bonds available and help investors diversify their investments
Ledger
specialized accounting book or computer program
UsedFoods tried to promote caramel chocolates in the US Hispanic Market and failed, but it had great success selling in the same market products that proved successful in Mexico. This suggests that some markets are large enough for:
specially designed promotion
What are 2 advantages of the using of computers to maintain and compile accounting information? (2pts)
speed; handle large amounts of data
Why is there more in an annual report now than ever?
stakeholders demand it
trial balance
step in the #accounting-cycle; a summary of all the financial data in the account #ledger s that ensures the figures are correct and balanced
______________ and their members provide value because they buy and sell securities on behalf of the companies and individuals they represent.
stock exchanges
Bulls
stock investors that believe the stock prices are going to rise; they buy stock in anticipation of the increase
Bears
stock investors that expect stock prices to decline and sell their stocks in anticipation of falling prices
Preferred Stock
stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold
____ are the owners of a public corporation
stockholders
The two groups the cost of capital (rate of return) must satisfy are:
stockholders (owners); lenders
The two groups the cost of capital (rate of return) must satisfy are: 3pts
stockholders (owners); lenders
assets are = to or balanced with the liabilities and owners' or _______ equity
stockholders'
Growth Stocks
stocks of corporations in emerging fields such as technology, biotechnology, or Internet-related firms whose earnings are expected to grow at a faster rate than other stocks
Income Stocks
stocks of public utilities; usually offer investors a high dividend yield that generally keeps pace with inflation
Blue-Chip Stocks
stocks that generally pay regular dividends and experience consistent price appreciation
income-statement 2pts
summarized revenues, cost of goods, and expenses (including taxes) for a specific period and highlights the total profit or loss the firm experienced during that period & shows the revenue a firm earned selling its products compared to its selling costs (profit or loss) over a specific period of time
Cole is an accountant with a large public company. As an account, his responsibilities include... (2pts)
summarizing and interpreting financial information needed by his firm's managers
Then, they're put into ____ ____ ____ such as the ______, _______, & _______.
summary financial statements; income statement; balance sheet; statement of cash flows
As Mac and Zac explore the possibility of starting a youth sports academy, they collect demographic and lifestyle information about the families who would potentially buy their service. This exercise will help to better identify their ________.
target market
Q - When promoting products, it is important to create excitement among salespeople, employees and customers. This explains why sales promotion .....
targets groups both internally and externally
The key working areas of accounting include: (5pts)
tax accounting; auditing; managerial accounting; government and not-for-profit accounting; financial accounting
Why is the job of being a tax accountant always challenging?
tax policies are always changing
Through environmental scanning, marketers can learn new ways to reach prospective customers. As they scan the _____________ environment, Mac and Zac hope to buy the most state-of-the-art mechanical arms for their youth sports academy. Recently, they learned about a robotic baseball player that stands at the plate. He can be programmed to change sizes. The big question for Mac and Zac is can they afford it; and if not, will their competitors decide to buy it?
technological
What word gives definition to each advertising medium's appropriate disadvantages? 4pts..... ____ = high costs; short exposure time; takes time to prepare..... ____ = depends on only one sense; short exposure time...... ____= high costs; consumers may reject as junk; must conform to post office regulations ____= easy to ignore, avoid
television..... radio.... direct mail.... mobile advertising....
activity ratios
tell us how effectively management is turning over inventory
Market Order
tells a broker to buy or sell a stock immediately at the best price available
Limit Order
tells the broker to buy or sell a stock at a specific price if that price become available
return on sales
tells us whether the firm is doing as well as its competitors in generating income from sales
Business to business (B2B) customers _________________.
tend to be more rational in their decision making than individual consumers
prosperity
the "peak" in the Business Cycle, it is characterized by low unemployment, high demand, increased production, and a high GDP
channel of distribution
the "route" a product follows in moving a product from the producer to the final consumer
bottom line
the #net-income or #net-loss the firm incurred from revenue minus sales returns, costs, expenses, and taxes over a period of time.
Selling a Bond at Premium
the ability to sell your bond at a price above its face value if other investors highly value it
Q - An advantage of magazine advertising is that ....
the ads can target a specific market segment, making them more effective
A benefit of utilizing social media to deliver advertising messages is
the advertiser can more easily track who has selectively viewed the message and who has passed it along to others
A benefit of utilizing social media to deliver advertising messages is ____________.
the advertiser can more easily track who has selectively viewed the message and who has passed it along to others
Falling Dollar Value
the amount of goods and services you can buy with a dollar decrease
Rising Dollar Value
the amount of goods and services you can buy with a dollar increase
profit
the amount of money available to the business after all costs/expenses are paid
start-up financing
the amount of money needed to open up a business; 75% of this capital comes from the owner's own savings and from family and friends
Money Supply
the amount of money the Federal Reserve Bank makes available for people to buy goods and services
owners equity 2pts
the amount of the business that belongs to the owners minus any liabilities owed by the business; aka stockholders' equity
three years
the amount of time it can take to "build up" a credit score
taxable income
the amount on which taxes are calculated after adjustments, deductions, and exemptions are subtracted
Q - ¨You never get a second chance to make a good first impression.¨ This statement refers to the importance of which step in the selling process?
the approach
Ratio Analysis
the assessment of a firm's financial condition, using calculations and financial ratios developed from a firm's financial statements
Dow Jones Industrial Average (the Dow)
the average cost of 30 selected industrial stocks, used to give an indication of the direction (up or down) of the stock market over time
World Bank
the bank primarily responsible for financing economic development; also known as the International Bank for Reconstruction and Development
Open-Market Operations
the buying and selling of U.S. government bonds by the Fed with the goal of regulating the money supply
Financial Transactions
the buying and selling of goods and services, acquiring insurance, paying employees, and using supplies
Year-to-date Return (YTD)
the change in the NAV fein the previous day's trading, and the fund's net assets
What is considered to be a primary advantage of online advertising?
the company can gather more information about the customer
expenses
the costs of operating a business
net worth
the difference between a person's or a family's assets and liabilities
cash flow
the difference between cash coming in and cash going out of a business
Barter
the direct trading of goods or services for other goods or services
interest
the dollar amount you pay to use someone else's money
Liquidity
the ease with which an asset can be converted into cash
liquidity
the ease with which an asset can be converted into cash
Maturity Date
the exact date the issuer of a bond must pay the principal to the bondholder
Accepting bank credit cards represents one way to decrease_____________.
the expense of collecting accounts recievable
Principal
the face value (dollar value) of a bond
Securities and Exchange Commission (SEC
the federal agency that has responsibility for regulating the various stock exchanges
retailer
the final business organization in an indirect channel of distribution for consumer products
How does it contrast managerial accounting?
the financial information and analyses it generates are for people primarily outside the organization
Balance Sheet
the financial statement that report's a firm's financial condition at a specific time
Income Statement
the financial statement that shows a firm's bottom line - the profit after costs, expenses, and taxes
income statement 2pts
the financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm (expenses), and the resulting net income or net loss.
3 true statements about factoring information:
the firm that buys the accounts receivable collects the amount due; small businesses often use it for financing in the short term; it is the accounts receivable of a firm sold for a discount
Continental Money
the first paper money printed in the U.S.
Initial Public Offering
the first public offering of a corporation's stocks
What are the four key categories of ratios?
the four key categories of ratios are liquidity ratios, leverage (debt) ratios, profitability (performance) ratios, and activity ratios
The risk/return trade-off principle means that:
the greater the risk a lender makes in making a loan, the higher the interest rate
fraud
the intentional misrepresentation of a crucial fact that causes consumers to buy and harm occurs, which can be financial, emotional, and/or physical
Federal Funds Rate
the interest rate banks charge each other
Discount Rate
the interest rate that the Fed charges for loans to member banks
Discount Rate
the interest rate that the Fed lends money to member banks
Which ration is the cost of goods divided by the average inventory?
the inventory turnover ratio
auditing
the job of reviewing and evaluating the information used to prepare a company's financial statement
loan term
the length of time you have to pay off a loan
credit limit
the maximum amount of credit a lender will extend to a customer
accounting system
the method used to record and summarize accounting data into reports;
Accounting System
the method used to record and summarize data into reports
wholesaler
the middle person/company (called an intermediary) between the manufacturer and the retailer in an indirect channel of distribution
Revenue
the monetary value of what a firm receives for goods sold, services rendered, and other payments
principal
the money you borrow (the amount of the loan)
Common Stock
the most basic form of ownership in a firm; it confers voting rights and the right to share in the firm's profits through dividends, if approved by the firm's board of directors
individual retirement account (IRA)
the most popular retirement income plan (a tax-shelter, where people can annually invest earnings up to a certain amount, which are "tax free" until the funds are withdrawn
Capital Account
the name for owner's equity for sole proprietors and partners
Bottom Line
the net income the firm incurred from revenue minus sales return, costs, expenses, and taxes over a period of time
The Federal Reserve (or the Fed)
the organization in charge of money in the United States
The #owners-equity account records...
the owners' claims to funds they have invested in the firm (such as stock) and retained earnings
Savings Association Insurance Fund (SAIF)
the part of the FDIC that insures holders of accounts in savings and loan associations
Interest
the payment the issuer of the bond makes to the bondholders for the use of the borrowed money
Margin
the portion of the stocks' purchase price that investors must pay with their own money
Capital Gains
the positive difference between the purchase price of a stock and its sale price
Double-Entry Bookkeeping
the practice of writing every transaction in two places
Q - After prospects have been identified and qualified, the next step in the selling process is to learn as much as possible about the potential customers' wants and needs. This step is called ...
the preapproach
Q - Which step in the personal selling process is NOT typically used by business-to-consumer (B2C) salespeople? why?
the preapproach; as opposed to personal selling in the B2B market, where salespeople go thru seven steps, there are only 5 steps in the B2C process: approach, asking questions, making a presentation, closing the sale, and follow-up
Net Asset Value (NAV)
the price per share of the mutual fund
networking
the process of talking to other people about their jobs
Q - The goal of ______ is to build awareness and inform consumers about a company and its product offerings
the promotion mix
Promotion is one of the four Ps of marketing. The promotion mix is __________.
the promotional tools marketers use to carry out promotion
The cost of goods includes: 2pts
the purchase price + - any freight charges paid to transport goods - any costs associated with storing the goods
ability
the quality of being able to perform a mental or physical task
supply
the quantity of a good or service that businesses are willing and able to provide
demand
the quantity of a good or service that consumers are willing and able to buy
Current Ratio
the ratio of a firm's current assets to its current liabilities
journal
the record book or computer program where #accounting data are first entered; a days transactions
Bookkeeping
the recording of business transactions
bookkeeping
the recording of business transactions, is a basic part of financial reporting
accounting
the recording, classifying, summarizing and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions
Accounting
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 (often called the language of business)
Net Income or Net Loss
the resources left over or depleted
competition
the rivalry among businesses to sell goods and services, which creates better product choices and better prices
Depreciation
the systematic write-off of the cost of tangible assets over its estimated useful life
Demand Deposit
the technical name for a checking account; the money in a demand deposit can be withdrawn anytime on demand form the depositor
Time Deposit
the technical name for a savings account; the bank can require prior notice before the owner withdraws money form a time deposit
Gross Domestic Product (GDP)
the total value of all final goods and services produced in a country in one year
stockholders' equity or shareholders' equity
the value of what stockholders own in a firm (minus liabilities)
Stockholder's/ Shareholder's Equity
the value of what stockholders own in a firm minus liabilities (Assets -(minus) liabilities)
if a business refuses to correct a problem
the very first thing you should do is write the manufacturer
economic indicators
these "officially" measure economic performance: GDP, inflation rate, and unemployment. Others, which indicate an improving economy include auto sales, restaurant meals, building new homes, golf outings, and even the "tooth fairy"
accounts payable
these are amounts a company owes for credit purchases
accounts receivable
these are amounts customers who paid on credit owe a business
outstanding checks
these are checks that have not been deducted from your balance because they have not been cashed or deposited
subsidies
these are government payments to businesses (and farmers) to make up for losses incurred
liabilities
these are monies owed, which can include credit card debt, car payments, a home mortgage, and college loans
savings and loans (S & L's)
these financial institutions traditionally specialize in making loans for home mortgages
social needs
these include parks, recreation (playgrounds for children), and libraries
government services
these include public protection (fire and police) public education, and courts
characteristics of money
these include stable, accepted as a form of exchange, easily divisible, portable, durable, and difficult to counterfeit
GDP exclusions
these include used goods, underground (often illegal activity) and intermediate goods
Q - what is the major role of financial managers?
they examine financial data and recommend strategies for improving the financial performance of the firm
What are two thru facts about venture capitalists?
they invest in businesses with high potential; they have assisted many major companies during start-up
3 true statements about commercial finance:
they make short-term loans; they wants borrowers to offer tangible assets as collateral; they charge higher rates than banks;
Financial managers must understand tax regulations b/c: 2pts
they must consider the tax implications of major decisions; businesses want to minimize taxes
needs
things that are essential to live such as food, water, clothing, shelter, medical.
values
things that are important to you
services
things that someone else does for you, which are used/consumed at the same time they are provided - - like a haircut, tire rotation, or oil change
service industry
this career is expected to have the greatest employment potential in the future
credit bureau
this gathers information on credit users and sells that information in the form of credit reports to those granting credit (lending institutions)
patent
this gives an inventor the sole right to make, use, or sell an item for 20 years
Federal Trade Commission (FTC)
this government agency protects competition through anti- trust laws
technological unemployment
this happens when technology displaced or outright replaces workers; companies are downsized, and outsourcing is common
unearned income
this includes money from dividends, interest, and rent
earned income
this includes money from wages, your salary, commissions, tips, and bonuses
certified check
this is a personal check for which a bank has guaranteed payment
credit union
this is a user, not-for-profit cooperative financial institution
franchise
this is a written contract granting permission to operate a business to sell products/services in a set way. Examples include McDonalds, Wendy's, and Taco Bell
generic brand
this is an "unbranded" item sold at a reduced price because it does not require advertising and fancy packaging
recession
this is an economic "slow-down" characterized by decreases in both supply and demand; unemployment rises; and GDP falls
commercial bank
this is often referred to as a "full-service" bank because it offers so many financial services
interest
this is the "cost" of using someone else's money
recovery
this is the "rise" in business activity after a recession/depression; it is characterized by people going back to work; people buying again; and GDP is going up
Federal income taxes
this is the largest source of income for the Federal government, which is used to pay for highways, national defense, social security and other transfer payments like welfare
required reserve
this is the part of money deposited by customers that banks must deposit with the Federal Reserve
discount rate
this is the rate financial institutions are charged to borrow funds from the Federal Reserve banks
trade barrier
this limits foreign trade to "boost" the sale of domestic goods
shortage
this occurs when demand is greater than supply
cyclical unemployment
this occurs when economic conditions are very bad; many lay-offs and plant closings are common
monopoly
this occurs when one company controls an entire industry; there is only one seller who can set prices "as high" as it wants
surplus
this occurs when supply is greater than demand
copyright
this protects "creative" work for the author's lifetime plus 70 more years
corporation
this type of business is owned by one or more shareholders and is managed by a Board of Directors
revolving account
this type of charge account requires customers to pay only part of the debt each month
A convenience store is open seven days a week and remains open on holidays. The store provides its customers with _________ utility
time
What are the purposes of accounting? (2pts + 9 such as pts)
to help managers make well-informed decisions; report financial information about the firm to interested stakeholders, such as employees, owners, creditors, suppliers, unions, community activists, investors, and the government (for tax purposes)
Why might one resort to making a capital expenditure? 3pts
to make future expansion; increasing production capabilities or levels of output
Why is adequate inventory important?
to meet customer needs
3 characteristics of promises included with a bond:
to repay on a certain date; to pay a certain interest rate; to repay the amount owed;
Why do not-for-profit accountants need to hire accountants?
to show contributors how their money is spent
The purpose of the product life cycle is it serves as a(n) __________
tool that tells the marketing manager if the product market is changing
Q - When a company has a long-standing relationship with its suppliers and purchases large quantities, it usually has 30-45 days to pay for the purchase. This arrangement is called
trade credit
_________ is the practice of buying goods and services now and paying for them later
trade credit
A legally protected brand is a _______________
trademark
Intraday Trading
trading throughout the current day
In a private company's accounting system, inputs are _______________ and outputs are _____________.
transactions such as sales and payroll expenses; financial statements
Circuit Breakers
triggered when the Dow falls 10, 20, or 30 percent in a day; will halt trading for half an hour to two hours so traders have time to asses the situation
True or false: the govt stepped in and put in place new rules about #auditing and #consulting to ensure the integrity of the #auditing process. 2pts
true... Sarbanes Oxley Act (Sarbox)
Financial Accounting
type of accounting that differs from managerial accounting in that the financial information and analyses it generates are for people primarily outside the organization
Managerial Accounting
type of accounting that provides information and analysis to managers inside the organization to assist them in decision making
Governmental and Not-For-Profit Accounting
type of accounting that supports organizations whose purpose is not generating a profit, but serving ratepayers, taxpayers, and others according to a duly approved budget
A loan that does not require collateral is called a(n)
unsecured loan
What is the basis behind unsecured and secured loans?
unsecured loans are usually only for the very stable customers; secured loans are backed by collateral
Products that the consumer purchases which include insurance, burial services or emergency car-towing are known as ___________ goods and services.
unsought
Insider trading
using knowledge or information that individuals gain through their position that allows them to benefit unfairly from fluctuations in security prices
Q - Todd McFarlane has chosen not to sell stock in his companies. While selling stock is sometimes an efficient way of raising funds, one of the major disadvantages of having stockholders is they ..... and why is that?
usually have voting rights; common stockholders have voting rights that may alter the way the company is run. Todd McFarlane would probably find such oversight too confining since he now enjoys full control and flexibility
Q - The goal of ____ marketing is to create conversation and compel the user to spread awareness of the product with friends and family
viral
Now that so many goods are produced abroad, companies are finding that services such as ___________ provide important utility to the process of successfully processing products through customs and other legal requirements
web-based trade compliance systems
liabilities
what a company owes, which can include payroll taxes, wages, bank loans, and a mortgage
assets
what a company owns (anything of value); which can include cash, inventory, equipment, buildings, and land
Operating Expenses
what business incur selling goods or services (such as rent, salaries, supplies, utilities, and insurance)
When financial managers consider long-term financing, they may ask 3 long-term questions, which are?
what sources of long-term funding (capital) are available, and which will best fit our needs?; what funds do we need to achieve the firm's long-term goals and objectives?; what are the organization's long-term goals and objectives?
Margin Call
what the broker may issue if the investor's account goes down in value, which requires the investor to come up with funds to cover the losses the account has suffered
liabilities
what the business owes to others (debts)
Liabilities
what the business owes to others - its debt
trade-off
what you give up to have something else
Currency or Money Exchange
when U.S. dollars are exchanged for either Euros or other foreign currency
Curbs
when a key computer is turned off and program trading is halted (called curbs in)
shadowing
when a person spends time with a worker for a day or week to learn about that person's occupation
ripple effect
when a recession causes an industry to fall, other related companies do as well
emotional buying motive
when consumers decide what products to purchase based on feelings, beliefs, and attitudes
rational buying motive
when consumers decide what products to purchase based upon facts and logic
Round Lots
when investors buy 100 shares at a time
Odd Lots
when investors buy fewer than 100 shares at a time
Underwrite
when the investment banking firm buys the entire stock or bond issue at a agreed-on discount
preferred stock
when you purchase this kind of stock, you are "first in line" for dividends and paid first (behind creditors) if the company goes bankrupt
common stock
when you purchase this kind of stock, you have voting rights in the company but are "last in line" behind creditors to receive money if the company goes bankrupt
debit card
when you use this to pay for something, you are using money in your own account; and the money is immediately taken from your account
Journal
where bookkeepers record financial data from original transaction documents (either record book or computer); the day's transactions
People sharing a clever commercial with other people and telling people thru the Internet about a product you've purchased, are examples of which kind of promotion?
word-of-mouth promotion
Q - Today, there are many websites dedicated to consumers who post reviews of products and services, as well as comments about firms. This is an example of ...
word-of-mouth promotion
Can a business increase sales and profits and still suffer cash flow problems?
yes
poor credit score of less than 500 points
you stand little chance of getting credit
credit rating
your reputation for paying your bills on time, which determines whether or not you will get a loan
