Financial Management

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Financial Management
2013-10-01 11:48:56

Principles of Business Administration Flash Cards.
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  1. Revenue
    All of the income that a business receives over a period of time.
  2. Expenses
    The cost of operating a business.
  3. Profit
    When revenue is greater than expenses.
  4. Loss
    When expenses exceed revenue, the business will suffer a loss.
  5. Budget
    Provides detailed plans for the financial needs of individuals, families, and businesses.
  6. Start up budget
    Plans income and expenses from the beginning of a new business or a major business expansion until it becomes profitable.
  7. Operating Budget
    Describes the financial plan for ongoing operations of the business for a specific period.
  8. Cash Budget
    A estimate of the actual money received and paid out for a specific period.
  9. Financial Records
    Used to record and analyze the financial performance of a business.
  10. Types of Records
    • Asset records-identify the buildings and equipment owned by the business.
    • Depreciation Records- identify the amount assets have decreased in value due to their age and use.
    • Inventory records- identify the type and quantity of resources and products on hand, along with the current value of each.
  11. Types of Records Continued
    • Records of Accounts- identify all purchases and sales made using credit.
    • Cash Records-list all cash received and spent by the business.
  12. Assets
    What a company owns
  13. Liabilities
    The expenses that the company owns.
  14. Owner's equity
    The value of the owner's investment in the business
  15. Balance Sheet
    Shows the assets, liabilities, and owner's equity for a specific date
  16. Income Statement
    Used to report revenue, expenses, and net income or loss from operations for a specific period.
  17. Payroll
    The financial record of employee compensation, deductions, and net pay.
  18. Payroll Records
    Documentation used to process earnings payments and record each employee's pay history
  19. Direct Deposit
    The employer transfers net pay electronically into the employee's bank account.
  20. Income Taxes
    The federal government, state, and some local governments require employers to withhold income tax from their employees' pay.
  21. Social Security and Medicare
    The gov. requires employers to withhold these deposits.
  22. Unemployment Taxes
    Employers pay Federal Unemployment Tax tot he unemployment insurance system.
  23. Financial Performance Ratios
    Comparisons of a company's financial elements that indicate how well the business is performing.
  24. Discrepancies
    Differences between actual and budgeted performance
  25. Net income ratio
    Total sales compared to the net income