Business unit 6

Return on capital is

a measure of how well a business generates cash flow in relation to the capital it has already invested in itself.

accrual accounting method

a method of accounting that records transactions at the time they occur even if no money changes hands at the time

The cash conversion cycle of working capital management is

a ratio that refers to the number of days between a company's paying for raw materials and receiving cash from selling the products made from those raw materials

accounting system

the methods and procedures used in consistently handling the business's financial information.

Accounting

the process of keeping and interpreting financial records.

Finance is

the process of obtaining funds and using them to achieve the goals of the business

A company's current balance of assets and liabilities falls under the focus of

working capital management.

Decisions about financing refer to the

Acquisition of funds

The cash conversion cycle should be

As short as possible

The finance function is usually responsible for which of the following processes:

Budgeting

Which of the following is a key component of managing working capital:

CCC

When return on capital is positive, the company is

Growing in value

Which of the following is a capital investment decision:

How to finance investments

How does the finance function relate to company spending?

It plans and controls spending.

Finance is distinct from Accounting because its main focus is on all of the following EXCEPT

Record keeping

Accounting is distinct from finance because its main focus is on

Record keeping activities

The goals of the finance function are to ensure profitability and to

Reduce risks

Which of the following is a measure of how well a business generates cash flow:

Return on capital

Managerial accounting

a type of accounting that involves preparing and reporting financial data to internal users who need financial information to control day-to-day operations and to make financial decisions and plans affecting the business

Money the business owes is known as

accounts payable

Money owed to the business is known as

accounts receivable.

Cash accounting

an accounting method in which income and expenditures are recorded at the time the money changes hands.

Cash accounting is used to

reduce and eliminate costs in a business. It is used to determine the price for a product or service that will allow earning of a reasonable profit.

Determining which projects a business should invest in is known as

capital budgeting

Capital investment decisions are

decisions that determine which projects a business will invest in, how the investment(s) will be financed, and whether or not to pay dividends to shareholders.

Assets a company already owns and can use to finance a new venture are called

equity

The finance function ensures that the company's financial goals are

in line with organizational priorities.

To keep communication flowing with other departments, the finance function depends on

information systems

Working capital management is

management of a firm's current balance of assets and liabilities; involves accounts payable and receivable, inventory and cash.

Finance is the business function that involves managing

money

The finance function would definitely be involved in a decision regarding

new business projects and strategies