Term
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Definition
| A yearly statement of the financial condition, progress, and the expectations of an organization. ( able to pay bills? how much debt does a company owe? ) |
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Term
|
Definition
| accounting information and analyses prepared for people outside the organization |
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Term
| Certified Management Accountant (CMA) |
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Definition
| professional accountant who has met certain educational and experience requirements, pass a qualifying exam and been certified by the instituted of certified management accountants |
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Term
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Definition
| Accounting used to provide information and analyses to managers inside the organization to assist them in decision making |
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Term
| What are the 5 key working areas for the accounting profession? |
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Definition
1. Managerial
2. Financial
3.Auditing
4.Tax
5. Government/not-for-profit |
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Term
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Definition
| the job of reviewing and evaluating the information used to prepare a company financial statements |
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Term
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Definition
| The method we use to record and summarize accounting data into reports |
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Term
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Definition
| the recording, classifying, summarizing, interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions |
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Term
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Definition
| An accountant who works for a single firm, government agency, or non-profit organization |
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Term
| What is "FASB" and "GAAP"? |
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Definition
1. Financial Accounting Standards Board
2. Generally accepted Accounting Principles |
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Term
| Certified Public Accountant (CPA) |
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Definition
| An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants ( AICPA) |
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Term
|
Definition
| an accountant who provides accounting services to individuals or businesses on a fee basis ( example: H&R Block ) |
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Term
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Definition
| An evaluation and unbiased opinion about the accuracy of a company's financial statements ( Annual reports often include an auditor's unbiased written opinion ) |
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Term
| Certified Internal Auditor (CIA) |
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Definition
| An accountant who has a bachelor's degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors |
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Term
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Definition
| An accountant trained in tax law and responsible for preparing tax returns for developing strategies |
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Term
| Government and not-for-profit accounting |
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Definition
| Accounting System for organizations whose purpose is not generating a profit but serving rate payers, tax payers, and others according to a duly approved budget |
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Term
| Organizations have operational needs for which they need funds. What are the 4 key areas? |
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Definition
1. Managing day-to-day needs of the business
2. Controlling credit operations
3. Acquiring needed inventory
4. Making Capital Expenditures |
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Term
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Definition
| Major Investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights |
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Term
| List some "Short-Term Funds" (Financing) |
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Definition
- monthly expenses
- unanticipated emergencies
- cash flow problems
- expansion of current inventory
-temporary promotional programs |
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Term
| List some "Long-Term Funds" (Financing) |
|
Definition
-New Products development
-Replacement of capital equipment
-mergers or acquisitions
-expansion into new markets ( domestic or global)
-new facilities |
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Term
|
Definition
| funds, raised through various forms of borrowing that must be repaid |
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Term
|
Definition
| Money raised from within the firm, from operations or through the sale of ownership in the firm ( stock of venture capital ) |
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Term
|
Definition
| Funds needed for a year or less |
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Term
|
Definition
| Funds needed for more than a year (usually 2 to 10 years) |
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Term
|
Definition
| The practice of buying goods and services now and paying for them later |
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Term
|
Definition
| A Written contract with a promise to pay a supplier a specific sum of money at a definite time |
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Term
| What are some companies they reply heavily on "trade credit"? |
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Definition
-United Parcel Service
-Kmart
-Macy's |
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Term
| What is a reason a organization would have to sign a "promissory note"? |
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Definition
| they may lack credit history, have a history of slow payments, or poor credit rating. |
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Term
| Instead of a small firm asking for money from friends or family, where else can they ask for money when they need short-term funds or to borrow money? |
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Definition
| Commercial Banks, they will fully understand the businesses risk and can help analyze its future financial needs rather than borrow from friends or relatives. |
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Term
|
Definition
| A loan backed by collateral, something valuable such as property. (If the borrower fails to pay the loan, the lender may take possession of the collateral) ex: automobile loan |
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Term
|
Definition
| A loan that doesn't require any collateral ( Given to usually highly regarded customers, long standing businesses or those considered financially stable. ) |
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Term
|
Definition
| Accounts receivable are company assets often used as collateral for a loan. ( process of pledging ) |
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Term
|
Definition
| A percentage of the value of a firm's accounts receivable pledged ( usually about 75 percent ) is advanced to the borrowing firm. A customer pays off their accounts, the funds received are forwarded to the leader in repayment of the funds that were advanced. |
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Term
|
Definition
| A given amount of unsecured short-term funds bank will lend to a business, provided the funds are readily available. Given to a business with a strong relationship with the bank. Line of Credit is NOT guaranteed. |
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Term
| Revolving Credit Agreement |
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Definition
| A line of credit that's guaranteed but usually comes with a fee |
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Term
| Commercial Finance Companies |
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Definition
| Organizations that make short-term loans to borrowers who offer tangible assets as collateral. ( Property, Planet, Equipment )Loan given to businesses that cannot get short-term funds elsewhere. Higher interest rates because of higher risk. |
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Term
| What is one of the world's largest commercial financial companies? |
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Definition
| General Electric Capital, $584 billion in assets and operations in over 50 countries around the world. |
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Term
|
Definition
| the process of selling accounts receivable for cash |
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Term
|
Definition
| Unsecured promissory notes of $100,000 and up that mature ( come due) in 270 days or less. States a fixed amount of money the business agrees to repay to the lender (investor) on a specific date at a specified rate of interest. |
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Term
| When does a corporation use "Commercial Paper"? |
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Definition
| When a corporation needs funds for just a few months and prefers not to have to negotiate with a commercial bank, larger firms will sell commercial paper as a strategy for funds. |
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Term
| According to the National Small Business Association (NSBA) nearly one third of all small firms use what to finance their businesses? |
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Definition
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|
Term
| In setting long-term financing objectives, financial managers generally ask what three questions? |
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Definition
1. What are our organizations long term goals/objectives?
2. What funds do we need to achieve the firm's long-term goals and objectives?
3. What sources of long-term funding (capital) are available, and which will best fit our needs? |
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Term
| What two major sources does long-term funding come from? |
|
Definition
1. Debt Financing
2. Equity Financing |
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Term
|
Definition
| A promissory note that requires the borrower to repay the loan in with interest in specified monthly or annual installments. Loan interest is tax-deductible. |
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Term
|
Definition
| borrowing money the company has a legal obligation to repay. Firms can borrow by either getting a loan from a lending institution or issuing bonds. |
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Term
| When are long-term loans usually due? |
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Definition
| 3 to 7 years, but may extend to 15 to 20 years |
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Term
| What may lenders that offer long-term loans to businesses require due to the repayment period being quite long? |
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Definition
| Collateral such as real estate, machinery, equipment, company stock, or other items of value. May also require certain restrictions to force the firm to act responsibly. |
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Term
|
Definition
| The principle that the greater the risk a lender takes in making a loan, the higher the interest rate required. |
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Term
|
Definition
| The terms of agreement in a bond issue |
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Term
| In an organization is unable to obtain it's long-term financing needs by getting a loan from a lending institution such as a bank, it may try to issue what? |
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Definition
|
|
Term
|
Definition
| A bond is like an IOU with a promise to repay the amount borrowed, with interest, on a certain date. |
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Term
| What types of organizations can issue bonds? |
|
Definition
-Federal
-State
-Local Government
-Federal Government agencies
-Foreign governments
-Corporations |
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Term
|
Definition
| A bond issues with some form of collateral such a real estate, equipment, or other pledged assets |
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Term
|
Definition
| A bond backed only by the reputation of the issuer; also called a debenture bond. |
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Term
| If a firm cannot obtain a long-term loan from a lending institution or is unable to sell bonds to investors, it may seek what? |
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Definition
|
|
Term
|
Definition
| fund available when the owners of the firm sell shares of ownership to outside investors in the form of stock, when they reinvest company earnings in the business, or when they obtain funds from venture capitalists. |
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Term
| Initial Public Offering (IPO) |
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Definition
| The first time a company offers to sell it's stock to the general public |
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Term
|
Definition
| profits the company keeps and reinvests in the firm |
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Term
| A company that uses retained earnings often saves what? ( money wise) |
|
Definition
- interest payments
- dividends (payments for investing in stock)
- any possible underwriting fees for issuing bonds or stock |
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Term
|
Definition
| Money that is invested in new or emerging companies that are perceived as having great profit potential |
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Term
| What companies were helped by venture capital? |
|
Definition
Intel, Apple, Cisco Systems. (Started)
Facebook, Google ( helped expand and grow ) |
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Term
|
Definition
| Raising needed funds through borrowing to increase a firm's rate of return |
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Term
|
Definition
| The rate of return a company must earn in order to meet the demands of its leaders and expectations of its equity holders |
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Term
| Securities markets are divided into what 2 markets? |
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Definition
|
|
Term
| Securities markets, financial marketplaces for stock, bonds, and other investments, serve what 2 major functions? |
|
Definition
1. Assist businesses in finding long-term funding to finance capital needs such ad expanding operations, developing new products, or buying buying major goods and services
2. Provide private investors a place to buy and sell securities (investments) such as stocks and bonds, that can help them build their financial future. |
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Term
| What does the Primary Market, and Secondary Market handle? |
|
Definition
Primary handles the sale of new securities
Secondary handles the trading of these securities between investors with the proceeds of the sale going to the investor selling the stock, not to the corporation whose stick is sold. |
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Term
| Corporations make money on the sale of their securities (stock) only once - when they sell it on the ___ market? |
|
Definition
|
|
Term
| How much did Facebooks IPO (initial public offering) raise in 2012? |
|
Definition
|
|
Term
| What company had the highest IPO (Initial public offering) in the past 25 years ? |
|
Definition
| Visa, raising 18 billion from it's IPO in 2008 |
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Term
|
Definition
| Specialists who assist in the issue and sale of new securities |
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|
Term
| Explain what a investment banker does. |
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Definition
| They can prepare extensive financial analyses necessary to gain SEC approval for bond or stock issues. Can also underwrite new issues of stock or bonds. |
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Term
|
Definition
| Large Organizations - such as pension funds, mutual funds, and insurance companies - that invest their own funds or the funds of others. Because of their vast buying power, institutional investors are a powerful force in securities markets. |
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Term
|
Definition
| A corporate certificate indicating that a person has lent money to a firm ( or a government ) |
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Term
|
Definition
| the exact date the issuer of a bond must pay the principal to the bondholder |
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Term
|
Definition
| the payments the issuer of the bond makes to the bondholder for the use of the borrowed money |
|
|
Term
| What are some firms that have a 100 year maturity dates? |
|
Definition
|
|
Term
| What is the "coupon rate"? |
|
Definition
| Another word for bond interest, a term that dates back to when bonds were issued as bearer bonds. |
|
|
Term
| what are 6 types of government securities that compete with corporate bonds? |
|
Definition
- U.S government bond
- Treasury bill ( T-bill)
- Treasury Note
-Treasury Bond
-Municipal Bond
-Yankee Bond |
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|
Term
| What are the two different classes of corporate bonds? |
|
Definition
- unsecured bonds
- secured bonds |
|
|
Term
|
Definition
| bonds that are unsecured, and are not backed by any specific collateral ( such as land or equipment ) |
|
|
Term
|
Definition
| sometimes called mortgage bonds, are backed by collateral such as land or buildings that pledged to bondholders if interest or principal isn't paid when promised. |
|
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Term
|
Definition
- issued with an interest rate
- are unsecured or secured by some type of collateral
- must be repaid at maturity date |
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|
Term
|
Definition
| A reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond. |
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Term
| What 3 things do a sinking fund do? |
|
Definition
- provide for an orderly retirement (repayment) of a bond issue
- they reduce the risk the bond will not be repaid
- they support the market price of the bond because they reduce the risk the bond will not be repaid. |
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|
Term
| What does a callable bond do? |
|
Definition
| permits the bond issuer to pay off the bond's principal before its maturity date. |
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|
Term
| Stock investors are often called 2 things.. |
|
Definition
Bulls- believe that stock prices are going to rise; they buy stock in anticipation of the increase.
Bears- expect stock prices to decline and sell their stocks in anticipation of falling prices When stock prices are declining, the market is called a bear market. |
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Term
|
Definition
| The positive difference between purchase price of a stock and it's sale price. |
|
|
Term
|
Definition
| a term derived from poker where the highest value chip was a blue chip. These stocks generally pay regular dividends and experience consistent price appreciation. ( Johnson and Johnson, Coca-Cola, IBM) |
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Term
|
Definition
| Stocks of corporations in emerging fields such as technology, biotechnology, or Internet related firms , whose earning are expected to grow as a faster rate than other stocks. While riskier, growth stocks may offer the potential for higher return |
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Term
|
Definition
| Stocks of public utilities, usually offer investors a high divided yield that generally keeps pace with inflation |
|
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Term
|
Definition
| Stocks that sell for less than $2 and are considered risky investments |
|
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Term
|
Definition
| tells a broker to buy or sell a stock immediately at the best price available. |
|
|
Term
|
Definition
| tells the broker to buy or sell a stock at a specific price if that prices becomes available. |
|
|
Term
| What are round lots, and odd lots? |
|
Definition
Round lots, buying in shares of 100 at a time
Odd lots, buying fewer than 100 shares at a time. |
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Term
|
Definition
| An action by a company that gives stockholders two or more shares of stock for each one they own |
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Term
|
Definition
| Purchasing stocks by borrowing some of the purchase cost from the brokerage firm |
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|
Term
| What financial websites carry up-to-the-minute information about companies stock and investment information? |
|
Definition
| MSN Money, Yahoo, Finance and CNBC |
|
|
Term
| Which newspapers carry enormous wealth of information on investment information? |
|
Definition
| The Wall Street Journal, Barron's, Investors Business Daily |
|
|
Term
| Dow Jones Industrial Average ( the Dow) |
|
Definition
| The average cost of 30 selected industrial stocks, used to give an indication of the direction ( up or down) of the stock market over time |
|
|
Term
| Who Began the practice of measuring stock averages in 1882, using prices of 12 key stocks? |
|
Definition
|
|
Term
| When did the Dow broaden to include 30 stocks? |
|
Definition
|
|
Term
| In 1999, Dow added what 5 companies? |
|
Definition
- Home Depot
- SBC Communications
- NASDAQ
- Intel
- Microsoft |
|
|
Term
| When did Visa, Goldman Sachs, and Nike replace Alcoa, Bank of America and Hewlett-Packard on the Dow? |
|
Definition
|
|
Term
| What are the 12 original Dow companies? |
|
Definition
-American Cotton Oil
-American Sugar Refining Co.
-American Tabacco
-Chicago Gas
-Distilling & Cattle Feeding Co.
-General Electric Co.
-Laclede Gas Light Co.
-National Lead
-North American Co.
-Tenessee Coal
-US Leather
-US Rubber Co |
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|
Term
| When was the first major market crash, and what percentage of it's value was lost in a single day? |
|
Definition
| October 29th, 1929. Lost 13% |
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|
Term
| On what day was the largest drop in the market, and how what percentage was the drop? |
|
Definition
| October 19th 1987, with a 22% drop |
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|
Term
| How much did investors lose in the market value from years 2000-2002 due to the burst in tech stock? |
|
Definition
|
|
Term
|
Definition
| Giving instructions to computer to automatically sell if the price of a stock dips to a certain point to avoid potential losses. ( Believed to be the cause of the market crashes) |
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|
Term
| What mechanisms did the US exchange create to restrict program trading whenever the market moves up or down by a large number of points in a trading day? |
|
Definition
- curbs
- circuit breakers |
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|
Term
| What time period did prices of existing homes rise 50%? |
|
Definition
|
|
Term
| When did housing value price fall 6.3 trillion? |
|
Definition
|
|
Term
|
Definition
| Anything that people generally accept as payment for goods and services |
|
|
Term
| What were items used as currencies before money? |
|
Definition
| salt, feathers, fur pelts, stones, rare shells, tea, horses |
|
|
Term
|
Definition
| The direct trading of goods or services for other goods or services |
|
|
Term
| How does a barter exchange work? |
|
Definition
| You put goods or services into system and get trade credits for other goods and services that you need. |
|
|
Term
| What are the 5 standards for a useful form of money? |
|
Definition
- Portability
- Divisibility
- Stability
- Durability
- Uniqueness |
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|
Term
| What is the newest forms of money? |
|
Definition
| Electronic Money (e-money) |
|
|
Term
| How much does it cost to make a penny or nickel? |
|
Definition
| 1.8 cents to make a penny, 9.4 cents to make a nickel. |
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|
Term
| Who is the Fed chairperson in control of the US Money supply? |
|
Definition
|
|
Term
|
Definition
| the amount of money the Federal Reserve Bank makes available for people to buy goods and services. |
|
|
Term
|
Definition
| Money that can be accessed quickly and easily (coins and paper money, checks, travelers checks, etc.) |
|
|
Term
|
Definition
| Money Included in M-1 plus money that may be taken a little more time to obtain (savings accounts, money market accounts, mutual funds, certificates of deposit, etc.) |
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|
Term
|
Definition
| M-2 plus big deposits like institutional money market funds |
|
|
Term
|
Definition
|
|
Term
|
Definition
|
|
Term
| What does the size of the money supply affect? |
|
Definition
| employment and economic growth or decline |
|
|
Term
|
Definition
| the amount of goods and services you can buy with a dollar decrease |
|
|
Term
|
Definition
| the amount of goods and services you can buy with a dollar goes up |
|
|
Term
| What 5 major parts does the federal reserve consist of? |
|
Definition
1. the board of governors
2. The federal Open Market Committee (FOMC)
3. 12 Federal Reserve Banks
4. three advisory councils
5. the member banks of the system |
|
|
Term
| Is the Federal Reserve apart of the Us Government? |
|
Definition
|
|
Term
| What are the 12 Federal Reserve District Banks? |
|
Definition
1. Boston
2. New York
3. Philadelphia
4. Cleveland
5. Richmond
6. Atlanta
7. Chicago
8. St. Louis
9. Minneapolis
10. Kansas City
11. Dallas
12. San Francisco |
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|
Term
| What are the 3 basic tools the Feds use to manage the money supply? |
|
Definition
- reserve requirement
- open-market operations
- discount rate |
|
|
Term
|
Definition
| A percentage of commercial banks' checking and savings accounts that must be physically kept in the bank |
|
|
Term
|
Definition
| The buying and selling of U.S government bonds by the Fed with the goal of regulating the money supply |
|
|
Term
|
Definition
| the interest rate that the Fed charges for loans to member banks |
|
|
Term
| What are the two interest rates the Feds can control? |
|
Definition
discount rate
federal funds rate |
|
|
Term
| What did the Community Reinvestment Act do? |
|
Definition
| encouraged loans to families with questionable ability to repay |
|
|
Term
| What was the Troubled Asset Relief Program? |
|
Definition
| a 700 dollar billion bailout packagee the treasury department proposed towards the end of George bush presidency |
|
|
Term
| What 3 major organizations protect. your money during an economic turn down? |
|
Definition
- The Federal Deposit Insurance Corporation ( FDIC)
- The savings Association Insurance Fund (SAIF)
- the National Credit Union Administration ( NCUA) |
|
|
Term
| Federal Deposit Insurance Corporation ( FDIC ) |
|
Definition
| An independent agency of the U.S government that insurance bank deposits. ( up to 250k per account ) |
|
|
Term
| Savings Association Insurance Fund ( SAIF ) |
|
Definition
| the part of the FDIC that insures holders of accounts in savings and loan associations |
|
|
Term
| National Credit Union Administration |
|
Definition
| provides up to 250k coverage per individual depositer per institution, coverages include all accounts- checking accounts, savings accounts, money market accounts, and certificates of deposit. |
|
|
Term
|
Definition
| The branch of government chosen to oversee the legal system through a system of courts |
|
|
Term
|
Definition
| The rules, statutes, codes, and regulations that provide a legal framework for the conduct of business and that are enforceable by court action. |
|
|
Term
| What laws must a business person be familiar with? |
|
Definition
| product liability, sales contracts, fair competition, consumer protection, taxes, and bankruptcy |
|
|
Term
| what two major fields of laws important to businesspeople? |
|
Definition
| statutory law and common law |
|
|
Term
|
Definition
| State and Federal constitutions, legislative enactments, treaties of the cereal government, and ordinances- in short, written law |
|
|
Term
|
Definition
| The body of law that comes from decisions handed down by courts; also referred to as unwritten law. |
|
|
Term
|
Definition
| Decisions judges have made in earlier cases guide the handling of new cases |
|
|
Term
|
Definition
| Federal or state institutions and other government organizations created by Congress or state legislatures with delegated power to create rules and regulations within their mandated area of authority |
|
|
Term
| Uniform Commercial Code (UCC) |
|
Definition
| A comprehensive commercial law adopted by every state in the US that covers sales laws and other commercial laws |
|
|
Term
| How many Articles does the UCC have? |
|
Definition
|
|
Term
| What are the major 2 articles of the UCC? |
|
Definition
| Article 2 which regulates warranties, and Article 3 which covers negotiable instruments |
|
|
Term
|
Definition
| guarantees that the product sold will be acceptable for the purpose for which the buyer intends to use it |
|
|
Term
| Where are the two types of warranties? |
|
Definition
Express warranties
Implied warranties |
|
|
Term
|
Definition
| specific representations by sellers that buyers rely on regarding the goods they purchase ( i.e the warranty you receive in the box with an iPad or toaster ) |
|
|
Term
|
Definition
| guarantees concerning products legally imposed on the seller |
|
|
Term
|
Definition
| requires seller to replace or repair a product at no charge if the product is not functioning or defective |
|
|
Term
|
Definition
| limits the defects or mechanical problems the seller covers |
|
|
Term
|
Definition
| Forms of commercial paper ( such as checks) that are transferable among businesses and individuals and represent a promise to pay a specified amount |
|
|
Term
| Article 3 of the UCC requires negotiable instruments to follow what 4 conditions? |
|
Definition
1. be written and signed by the marker or drawer
2. be made payable on demand or at a certain time
3. be made payable to the bearer ( the person holding the instrument)
4. contain an unconditional promise to pay a specified amount of money |
|
|
Term
|
Definition
|
|
Term
| What are 3 things a cash flow statement has? |
|
Definition
- cash from from operating activities
- cash from from investing activities
- cash from financing activities |
|
|
Term
| What are the 3 special features bonds? |
|
Definition
- callable bond
- sinking bond
- convertible bond |
|
|
Term
| What are the 5 key financial statements? |
|
Definition
- balance sheet
- income statement
-statement of cash flow
-statement of changes in equity
- note of financial statement |
|
|
Term
| Accounting does what 4 major things? |
|
Definition
- recording
- classifying
-summarizing
-interpreting |
|
|
Term
| The FR ( Federal Reserve ) control the money supply with 4 important methods, what are they? |
|
Definition
-Reserve requirement
-open-market operations
-discount rate
-FR checking-clearing role |
|
|
Term
| How do investors buy securities? ( 4 ways ) |
|
Definition
-stockbroker
-online broker
-strategy
-diversification |
|
|
Term
| Relating to trade credit what does "2/10, net 30" mean |
|
Definition
| When a customer gets their bill the 2/10 means a 2% discount if paid within 10 days, if not it's due in 30 days and you won't receive the 2% discount |
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|
