Accounting and Financial Management Terms and Concepts, Quizzes of Introduction to Business Management

Download Accounting and Financial Management Terms and Concepts and more Quizzes Introduction to Business Management in PDF only on Docsity! TERM 1 2 Purposes of Accounting DEFINITION 1 managerial reporting (internal)- management planning and control; budgeting financial reporting (external)- info. for investors and creditors; tax prep. TERM 2 Double entry system and Accounting Equation DEFINITION 2 Assets=Liabilities+Owner's Equity must always balance every entry must have offsetting entry TERM 3 3 Key Financial Statements DEFINITION 3 Income Statement- profit and loss statement- revenue, net income...etc.-Quarter, YTD, FYE Balance Sheet-assets, liabilities, owner's equity Cash Flow Statement-Detail needed to better understand firms financial situation, Inflow (sources) and outflow (uses) of cash during a period of time, Identifies year-to-year changes in cash TERM 4 Assets Current value DEFINITION 4 original cost-accum. depreciation=current value TERM 5 Profitability Ratios DEFINITION 5 Profit margin=net income/sales returns on assets=net income/assets returns on equity=net income/equity TERM 6 Liquidity Ratios DEFINITION 6 current ratio=current assets/current liabilities quick ratio= (current assets-inventory)/current liabilities TERM 7 Asset Utilization ratios DEFINITION 7 Receivables turnover=sales/receivables Inventory turnover=sales/inventory Total asset turnover=sales/total assets TERM 8 Debt utilization ratios DEFINITION 8 Debt to total assets=total debt/total assets Times Interest earned= (income before interest and tax)/interest expense Earnings Per Share (EPS)=net income/number of shares outstanding TERM 9 CD DEFINITION 9 Certificate of Deposit fixed interest rate; fixed term and maturity; TERM 10 The Fed DEFINITION 10 U.S. central bank Establishes monetary policy TERM 21 Owner's Equity DEFINITION 21 funds contributed by owners plus profits not distributed to owners in the form of cash dividends TERM 22 Accrual Accounting DEFINITION 22 accounting method that records revenues and expenses when they occur, not necessarily when cash actually changes hands TERM 23 budget DEFINITION 23 organizations plans for how it will raise and spend money during a given period TERM 24 Money market instruments DEFINITION 24 short term debt securities issued by govts, financial institutions, and corporations TERM 25 Gov't Bonds DEFINITION 25 Bonds sold by U.S. dept of treasury TERM 26 Municipal Bonds DEFINITION 26 bonds sold by state or local gov't Revenue bond vs. General obligation bond TERM 27 Debentures DEFINITION 27 unsecured bonds TERM 28 Two factors determine price of bond DEFINITION 28 risk and interest rate TERM 29 Speculative Bonds DEFINITION 29 BB and below- junk bonds TERM 30 Common stock DEFINITION 30 ownership claims in corporations TERM 31 IPO DEFINITION 31 Initial public offering (IPO)- company first offers stock for sale TERM 32 Financial Markets DEFINITION 32 Financial markets- market in which securities are bought and sold TERM 33 Primary Market DEFINITION 33 Primary market- financial market in which new security issues are first sold TERM 34 Secondary Market DEFINITION 34 financial market in which already issued securities are traded between investors TERM 35 Underwriting DEFINITION 35 institutions purchase the issue from the firm or govt and resell issue to investors TERM 46 Private Placement DEFINITION 46 stocks exclusive to small group of major stockholders TERM 47 Sovereign Wealth Fund DEFINITION 47 companies owned by govt and invest in a variety of financial and real assets TERM 48 LBO DEFINITION 48 Leveraged buyout transaction in which public shareholders are bought out and the firm reverts to private status TERM 49 Sell-off DEFINITION 49 assets sold from one firm to another TERM 50 Spin-off DEFINITION 50 assets sold form a new firm TERM 51 Divestiture DEFINITION 51 sale of assets by a firm TERM 52 Most commonly used Fed monetary policy DEFINITION 52 open market (buying and selling gov't securities) TERM 53 Buy gov't securities DEFINITION 53 money supply increases TERM 54 increase reserve req's DEFINITION 54 money supply decreases TERM 55 raise discount rate DEFINITION 55 money supply decreases TERM 56 relax credit controls DEFINITION 56 people encouraged to make more purchases