BUA 100 Midterm
What is the definition of a business' vision?
A statement by management on how they will win customers in the future
Define marginal benefit
Benefit of producing the next unit of product
Define marginal cost
Cost of producing the next unit of product
What does COGS stand for? What does it mean?
Cost of sales - direct costs attributable to producing or providing the goods sold by a company (includes material and labor costs)
Financial reports are mandatory and must follow...
GAAP - generally accepted accounting principles
What question does the income statement provide an answer for?
How well did the company perform during the year
What are the 4 types of capital that business requires?
Human, physical, information, and financial
A performance objective is
Is any goal related to any area of a business
What are the 3 basic types of business? What do they do?
Manufacturer - makes things Retailer - sells things to a customer Reseller - a distributer/wholesaler; middleman
What is the "bottom line"
Net income (or loss) for the period (i.e. month, quarter, fiscal year)
How is gross profit/gross margin calculated?:
Subtracting the cost from the price or (sales - COGS)
In business, what is meant by the "mission"?
The current purpose of the business
Span of control refers to
The number of people reporting to one manager
What question does the balance sheet provide an answer for?
What is the company's financial position at year end
Assets = ? What financial statement is this related to?
assets = liabilities + owner's equity Balance sheet
financing cash flow activities
borrowing and repayment of borrowed funds; equity transactions such as issuing stock, paying dividends, and repurchase of company stock
operating cash flow activities
cash flows from selling goods and providing services to customers
investing cash flow activities
cash flows from the purchase and sale of LONG-TERM assets
Profit ____: a) is one of the main goals and responsibilities of management b) occurs when income exceeds expenses c) is necessary to sustain the business d) all of the above
d) all of the above
current liabilities
debts payable in the next year
long term liabilities
debts payable more than one year
What does EBIT stand for?
earnings before interest and taxes
current assets are those that are:
expected to be converted to cash, sold, or consumed in the next year
What are the two types of accounting?
financial and managerial
operating profit = ?
gross profit - SG&A
What question does the statement of cash flows provide an answer for?
how much cash did the company generate and spend during the year?
Define interest income and interest expense
income - earned on investments (positive) expense - cost to finance the business (negative)
What financial statement is also called the statement of operations?
income statement
What financial statement shows the "bottom line"?
income statement
What financial statement shows the "top line"?
income statement
What type of business is Whitman Chocolates?
manufacturer
Revenues - expenses = ? What financial statement is this related to?
net income (or loss) income statement
Current liabilities must be repaid in how long a time period?
one year or less
the statement of cash flows categorizes cash transactions into 3 types of activities:
operating investing financing
Increase/decrease in cash = ? What financial statement is this related to?
operating cash flows +/- investing cash flows +/- financing cash flows = increase/decrease in cash Statement of cash flows
What is SG&A?
operating expenses other than Cost of Sales (COGS)
What is the primary function of managerial accounting?
provides info for internal users (i.e. managers); includes: budgets, forecasts, etc. doesn't need to follow GAAP
assets represent
resources that the business owns or controls
top line refers to?
revenues (sales)
net income refers to
revenues - expenses
The income statement reports 2 main categories:
revenues and gains expenses and losses
What is comparative advantage?
the ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity
The term marketing channel refers to:
the distributors and retailers who carry a firm's products
the balance sheet is also referred to as:
the statement of financial position
Pure competition arises when
there are many buyers and many sellers
what is the primary function of financial accounting?
to provide info to external users (i.e. investors, govt, the public)
Net sales = ?
total sales less returns and allowances
long term assets are those that:
will be held longer than one year
