Card Set Information
principals of business administration
What is revenue?
All income that a business receives over a period of time.
What are expenses?
The costs of operating a business.
What is a budget?
Provides detailed plans for the financial needs of individuals, families, and businesses.
What is a start-up budget?
plans income and expenses from the beginning of a new business or major business expansion until it becomes profitable.
What is an operating budget?
describes the financial plan for ongoing operations of the business for a specific period.
What is a cash budget?
an estimate of the actual money received and paid out for a specific period
What are financial records?
They are used to record and analyze the financial performance of a business.
What are assets?
They are what a company owns.
What are liabilities?
They are what a company owes.
What is owner's equity?
It is the value of the owner's investment in the business.
What is a balance sheet?
The assets, liabilities, and owner's equity for a specific date are listed on this.
What is an income statement?
It reports the revenue, expenses, and net income or loss from operations for a specific period.
What is payroll?
The financial record of employee compensation, deductions, and net pay.
What are payroll records?
The documentation used to process earnings payments and record each employee's pay history.
What is direct deposit?
When the employer transfers net pay electronically into the employee's bank account.
What are financial performance ratios?
A comparison of company's financial elements that indicate how well a business is performing.
What are discrepancies?
The differences between actual and budgeted performance.
What is a current ratio?
It is current assets compared to current liabilities.
What is debt to equity ratio?
The company's liabilities divided by the owner's equity.
What is return on equity ratio?
The net profit of the business compared to the amount of owner's equity.
What is net income ratio?
The total sales compared to the net income for a period such as six months or a year.
What are income taxes?
When the government withhold income taxes from employees' pay.
What is social security and medicare?
The government requires employers to withhold and deposit these contributions from employees' paychecks along with matching contributions by the employer.
What are unemployment taxes?
Employers pay Federal Unemployment Tax to the unemployment insurance system.
What are the three elements of a company's financial strength?
Assets, Liabilities, Owner's equity.