Chapter 9

A payroll check will list what items for every employee?

-date -check number -# of hours worked -base pay -overtime hours worked -gross pay -taxes -benefit deductions -net pay

What are the three common forms of debt for a small business?

1) loans 2) credit cards 3) supplier credit

What are the two accounting systems available for small businesses?

Cash basis and accrual basis

What is the operational impact of equity investments?

Investors can be passive or active, minority or majority

What are two types of equity investors?

Venture capital and business angels

profit and loss statement

a financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time

asset lease

a form of lease tied to a particular asset used by a business to conserve cash and maintain the latest versions of whatever equipment is available

venture capital fund

a fund that is organized to make significant equity investments in high growth new ventures

debt

a generic term to describe any type of non equity funding tied to the business

asset based lending

a loan provided for the purchase of a necessary asset for the business

factoring

accounts receivable that are sold at a discount to another company in order to receive immediate cash

supplier credit

another form of non equity funding that is available. suppliers provide credit on physical assets and supplies

loans

contractual agreements whereby the firm receives some amount of money that must be repaid over a specified period of time at a specified interest rate

credit card

credit entitling one to revolving credit that is not tied to any particular asset, does not have a set repayment schedule, and is usually tied to a much higher interest rate than a bank loan

equity investment

funds received by a business in exchange for a percentage of ownership in the business

business angels

high net worth individuals that invest in businesses not as a business but as an individual

Accrual basis accounting system

more common method, expenses and revenue recorded when they apply regardless of when actual cash is received

grants

special funds, neither equity of debt, that do no require repayment and are designed to aid businesses in specific areas

shrinkage

the difference between what is sold and what was brought into the business

Cash basis accounting system

used by very small businesses, records income and expenses when actually received and incurred