BA101 2nd test – Flashcards

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Accounting
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a system for recognizing, organizing, anaylzing, and reporting info about the financial transactions that affect an organization
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Creditors
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typically require accounting info of a firm to evaluate its creditworthiness by analyzing the firms financial statements
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Why do stockholders typically want to view a firms accounting info?
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Because they're part owners
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As a management accountant:
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you work within an organization, prepare reports, and analyze financial info such as budgets and cost management
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Public accountants:
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Provide management consulting and external auditing services on a fee basis
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The balance sheet:
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summarizes a firms financial position at a specific point in time by listing its assets, liabilities, and owners equity
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Assets
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are valuable things owned by the firm
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What is the accounting equation?
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Assets+liabilities = owners equity
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Liabilities
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refer to the claims that stockholders have against their firms assets
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Income statement:
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indicates whether a firm earned a profit or suffered a loss over the past accounting period
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According to accrual basis accounting:
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method of accounting, revenues are recognized when they are earned, and payment is reasonably assured
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Net income is the difference between
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a firms revenue and its cost of goods sold
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Expenses
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refers to cash spent by a firm to carry out business activities and generate revenue
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What should CPA firms do to maintain their integrity while auditing a firm?
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Must be independent of the firm they audit
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The process of developing an operating budget begins with the development of a
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Sales budget
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Managerial Accounting
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provides reports and analysis to senior level employees of a firm to assist them in making better informed business decisions
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Finance
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the functional are of business that is responsible for finding, among many alternatives, the best sources of fund and the best ways to use them
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Historically, the most widely accepted goal of financial management is to:
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maximize value of firm to its owners
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Financial management:
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management of the firms working capital and the analysis of longterm invest opportunities
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The degree of uncertainty related tot he actual outcome of a decision is a:
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Risk
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financial managers use financial ratio analysis to:
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asses the financial strengths and weaknesses of their firm
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Key numbers that financial managers use to calculate ratios usually come from the firms
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liquid asset
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Liqudity ratios:
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Ratios that measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the next year
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The average collection period
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measure how effectively a firm uses its assets to generate net income
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The debt to assets
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measures the extent to which a firm relies on debt to meet its financing needs
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Budgeted income statement
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used to develop a forecast of net income for the planning period of the firm
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Budgeted balance sheet
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forecasts the types and amount of assets a firm will need to implement its future plans as well as the amount of additional financing the firm must arrange in order to acquire those assets
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Commercial paper
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short term, unsecured, promissory notes issued by financial institutions and other major corporations
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Factor
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companies that provide short term financing to firms by purchasing their accounts receivables at a discount
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Spontaneous financing
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funds that arise during the natural course of a firms business operations without the need for special arrangements
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As a short term credit arrangement, banks sometimes extend revolving credit agreement, which are:
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guaranteed lines of credit in which the borrowing firm pays a commitment fee on the unused portions of the funds the bank has committed
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When a firm reinvests some of its net income rather than distributing it to owners, the result is an increase in the firms:
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returned earnings
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The purpose of a covenant is to:
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protect credits by preventing borrowers from pursuing policies that might undermine its ability to repay the loan
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Credit unions
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non-profit organizations owned by their depositors, which strive to pay higher interest rates on member deposits and charge lower interest rates on loans
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Securities dealer
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financial intermediaries who participate directly in securities markets, buying and selling stocks and bonds for their own account
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Dividneds to common stockholders are:
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right to receive of board of directors declares okay
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Stockholders receive capital gain if:
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the price of stock rises above the amount their paid for it
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Preemptive right of stockholders:
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if a corporation issues new stock, existing stock holders sometimes get first pick
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Right to residual claim on assets means that:
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if a company goes out of business, they have right to some assets if any left
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Capital gain
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when stockholders make money selling their shares, the stock goes up in price from what they bought it from
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Perfereed stockholders enjoy a preference over common stockholders with respect to:
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Claims on assets and payment of dividends
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Bond
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Formal IOU issued by a corporation or government entity
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Premium rate:
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When a bond is selling above the par value
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Discount rate:
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When a bond is selling below par value
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Maturity date
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exact date when bond reaches full value
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Financial diversification
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practice of holding many different securities in many different sectors
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Primary securities market
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corporations raise additional financial capital by issuing and selling new securities
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Secondary securities market
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investors trade previously issued securities
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An initial public offering (IPO):
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first time a corporation issues tock that may be purchased by general public
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Investment bank
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finanical intermediary that assists corporations when they issue new securities
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Before going public, a firm must register with the:
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SEC
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NYSE and NASDAQ
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two largest securities exchanges in the USA
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Stock index
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allows investors to track general market conditions
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When a business provide utility:
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satisfy customers wants and needs by providing goods and services at a convenient moment for customers
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Marketing:
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an organizational function and s set of processes for creating, communicating, and delivering value to the customers and for managing customer relationships in ways that benefit the organization and the stakeholders
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Form utility
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satisfies wants by convering inputs to a finished product
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Production era
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customers didn't really matter, everything was produced the same
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Selling era
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for first time, supply passed demand which caused hard sell
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Marketing era
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flooded market with choices in almost every category, marketing concept developed to please customers.
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Relationship era
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creating long term relationships with customers, most recent era
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Value
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customers perception that a product has a better relationship between the cost and the benefits of that particular product than the products of the competitors
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Marketing plan
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formal document to answer the question "who is your target market and how do you reach them?"
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Demographics
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Vital starting point for most marketers
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Customers marketers
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direct their efforts toward people who are buying products for personal consumption
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psychographic segmentation
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dividing customer into groups based on consumer attitudes, interests, values, and lifestyles
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Marketing mix
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product, price, distribution, and promotion
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Enviormental scanning
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process of continually collecting information format he external marketing enviorment
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Customer behavior
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refers to how people act when buying goods and services for personal consumption
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Two main approaches used in primary marketing research:
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secondary data and primary data
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Survey research
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involves interaction with research subjects. the key advantage is that the marketer can secure information about what people are thinking and feeling
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observation research
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no interactions directly between researcher and research subject
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Creating products tailored for individuals on a mass basis is referred to as:
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mass cusomization
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Actual product
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the physical good or delivered service that provide a core benefit
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Licenesing
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involves purchasing the right to use another companies brand name or symbol
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Cannibalization
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occurs when a new product line "eats" the sales of an existing line
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Product line
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group of products that are closely related to each other, in terms sod either how they work or the customers they serve
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Installations
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are large capital purchases designed for a long, productive life. their marketing emphasizes personal selling and customization
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Product quality
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relates directly to product value, which comes from understanding a customer
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Manufactuers brands
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brands that a producer owns and markets
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Product life cycle
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theoretical model that includes the stages of introduction, growth, maturity, and decline
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Product placement
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paid integration of branded products in movies and on television
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Advertising
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paid, non personal communication designed to influence a target audience with regard to a product, service, organization, or idea
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Sponsoship
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The combination of communication tools that a firm chooses to advertise their products
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Premiums
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items consumers receive free of charge in return for making a purchase
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Physical distribution
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the actual movement of products along a channel of distribution
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Goal of distribution strategy:
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getting the right product to the right person at the right time at the right place at the right time
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Two key elements of distribution strategy:
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channels of distribution and physical distribution
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Supply chain management
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planning and coordinating the flow of goods from the raw materials to the final consumers
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