business

Card Set Information

Author:
wahwahfire
ID:
290980
Filename:
business
Updated:
2014-12-07 23:41:30
Tags:
wahwahfire
Folders:

Description:
wahs
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user wahwahfire on FreezingBlue Flashcards. What would you like to do?


  1. Accounting
    Recording measurement and interpretation of financial info
  2. GAAP
    Generally accepted accounting principles
  3. Accounting equation
    Assets = liabilities + owners equity
  4. Assets
    A firms resources such as cash, inventory, land, equipment, buildings , and tangible/intangible things
  5. Liabilities
    Debts that a firm owes
  6. Owners equity
    Assets - liabilities
  7. Double entry bookkeeping
    • System of recording and classifying business transactions that maintains balance of accounting equation
    • Balance- keep accounting equation in balance , transaction must be recorded two separate accounts
    • Classification- transactions classified as assets, liabilities or owners equity
    • Breakdown- break down accounts into cash, inventory, and equipment
  8. Accounting cycle
    • Examine source documents
    • Record transactions
    • Post transactions
    • Prepare financial statements
  9. Income statement
    Financial report that shows an organizations profitability over a period of time
  10. Balance sheet
    An organizations financial position at a given moment
  11. Statement of cash flows
    Explains how the companys cash changed from the beginning of the accounting period to the end
  12. Three categories of cash flow
    • Operating activities
    • Investing activities
    • Financing activities
  13. Liquidity ratio
    • Ratios that measure the speed with which a company can turn its assets into cash to meet short term debt
    • / current ratio
  14. Current ratio
    Current assets divided by current liabilities
  15. Profit margin
    • Net income/ revenue
    • High profit margin means more profitable company
  16. Inventory turnover
    • Ratio Showing how many times a company inventory is sold and replaced over time
    • sales/inventory
  17. Finance
    Study of money, how its made, how its lost, how its managed
  18. Functions of money
    • Medium of exchange - Used in place of bartering
    • Trade money for goods and services
    • Measure of value-value of items
    • Store of value- accumulate wealth
  19. Characteristics of money
    • Acceptability
    • Divisibility
    • Portability
    • Stability
    • Durability
    • Difficult to counterfeit
  20. Federal reserve
    • Controls money supply with monetary policy
    • Regulates financial situations
    • Manages regional and national check clearing procedures
    • Supervises federal deposit insurance of commercial banks in federal reserve system
  21. Monetary policy
    Fed controls amount of money available in economy
  22. Monetary policy tool - reserve requirement
    • Percentage of deposits a bank must hold in reserve
    • Requirements up = interest rate up, money supply down, econ act down,
    • Restrictive policy
    • Requirements up = expansionary policy
  23. Monetary policy tool - discount rate
    • Rate of interest the fed charges to loan money to banksLowering discount rate encourages borrowing and expand money supply vice versa
    • Discount rate up = interest up, money supply down, activity down, 
    • Restrictive policy
  24. Monetary policy tool - open market operations
    • Decisions to buy or sell u.s treasury bill in open marketBuying securities increase money supply vice versa
    • Govt buy bond, money supply up,econ activity up, expansionary policy
    • Sells bond = restrictive monetary policy
  25. Banking institutions
    • Commercial banks - checking and savings accounts
    • Savings and loan associations - offers saving accounts and make long term loans
  26. Nonbanking institutions
    • Diversified firms- traditionally nonfinancial firms have expanded into financial field
    • Insurance companies - protects clients against lossesPension funds- investment to retirement income for members
    • Mutual fund
    • Brokerage firm
    • Investment bank
    • Finance companies
  27. Managing current assets
    • Transaction balances - cash to pay daily expenses like wages and bills for supplies
    • Marketable securities
    • Treasury bills
  28. Managing current liabilities
    • Accounts payable
    • Line of credit
    • Secured loans
  29. Bonds
    Debt instruments that large companies sell to raise long term funds
  30. Equity financing - retained earnings
    Earnings after expenses and taxes are reinvested
  31. Investment banking - Primary market
    Where firms raise financial capital
  32. Investment banking - secondary markets
    Where investors can trade their securities with others
  33. Investment banking
    Sales of stocks and bonds for corporations

What would you like to do?

Home > Flashcards > Print Preview