Term
| Financial Statement: BALANCE SHEET |
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Definition
Balance sheet:
attempts to describe the financial condition of the firm at a point in time.
Assets
Liabilities
Equity - "net assets" what remains after deducting liabilities from assets. |
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Term
| Financial Statement:INCOME STATEMENT |
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Definition
Income Statement:
Presents the results of the operations of an entity over a peroid of time.
Revenues
Expenses
Income
Gains
Losses |
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Term
| Financial Statement:STATEMENT OF EQUITY (CAPITAL) |
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Definition
Statement of Equity (capital)
bridge between the income statement and the balance sheet.
Arrangement depends on type of organization:
Proprietorship: Statement of Owners Equity
Partnership: Statement of Partners Equity
Corporation: Statement of Stockholders Equity
In addition, it contains:
Investments by Owners
Distribution to owners |
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Term
| Financial Statement:STATEMENT OF CASH FLOW |
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Definition
Statement of Cash Flow
Provides information about a company's cash receipts and cash payments during a specific period of time.
Includes all 10 elements of financial statements: assets, liabilities, equity, net income, income, gains, losses, Statement of 'X' Equity, Investments by Owners, Distributions to Owners. |
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Term
| Accounting Recognition: CASH BASIS |
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Definition
| Cash Basis - revenue is recognised in the accounting peroid in which the associated cash is recieved. Expenses are recognized in the accounting period THAT THE CASH IS PAID. |
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Term
| Accounting Recognition: ACCRUAL BASIS |
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Definition
| Accrual Basis - revenue is recognized in the accounting period in which the revenue is earned, regardless of when the associated revenue is received. (Recorded when the sale is made, not when it is paid for.) |
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Term
| Depreciation: STRAIGHT LINE DEPRECIATION |
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Definition
Straight Line Depreciation - (estimated value/useful life)
Equal amounts of depreciation expense are recorded in each period of the useful life of the asset, if not disposed of prior to the end of estimated useful life.
The value is divided among estimated life of item. |
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Term
| Depreciation:DOUBLE DECLINING BALANCE |
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Definition
Double Declining Balance
An "accelerated" depreciation method (more expense is recorded in the early periods of useful life and less in the later periods.) |
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Term
| Basic Inventory Equation (s) |
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Definition
Beginning Inventory + Purchases = Goods Available for Sale - Ending Inventory = Cost of Goods Sold
Beginning Inventory + Purchases = Goods available for sale - Cost of goods sold = ending inventory |
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Term
| Inventory Accounting Systems: PERIODIC |
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Definition
Periodic Inventory Accounting System
No transactions are recorded in the inventory account until the end of the accounting period. Merch purchases are recorded in a purchases account.
Inventory is counted and costed at the end of each accounting period. The inventory account beginning balance is adjusted to physical inventory amount and the difference is added to or subtracted from periodic Cost of Goods Sold. |
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Term
| Inventory Accounting Systems: PERPETUAL |
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Definition
Perpetual inventory accounting system -
Merchandise purchases are added to the inventory account when the merchandise is received.
Cost of Goods Sold is computed and subtracted from the inventory account as sales are recorded. |
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Term
4 Inventory costing assumptions:
FIFO
LIFO
Average Cost
Specific Identification |
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Definition
FIFO - First In First Out: oldest items inventory are sold first (fruit)
LIFO - Last in Last Out: most recent items added to inventory are sold first. (pile of rocks)
Average Cost: Ending inventory units are costed using an average cost of goods available divided by the units available for sale. (rope)
Specific Identification: Inventory items are tagged with their cost. (automobiles) |
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Term
| What does GAAP stand for? |
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Definition
| Generally Accepted Accounting Principles |
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Term
| What did the Securities Act of 1935 do? |
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Definition
Established the SEC Securities and Exchange Commission with the explicit authority to establish:
The rules, standards, and procedures used to account for transactions and events
Also to establish the form and content of published financial reporting. |
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Term
Management Accounting vs Cost Accounting
Difference? |
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Definition
Management accounting is concerned with identification, measurement, accumulation, analysis, preparation, interpretation, and comminication of financial information used my management to plan and evaluate and control within an organization TO ASSURE APPROPIATE USE OF AND ACCOUNTABILITY FOR ITS RESOURCES.
Cost Accounting is concerned with THE COST OF A PRODUCT OR SERVICE. |
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Term
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Definition
Product cost: cost of the various products manufactured and sold by a company. (inventory costs - cost of soap bar produced))
Period cost: all costs incurred by a company that are not considered product costs. (expenses - cost of administration or selling at soap plant)
Direct cost: A cost that is easily traceable to the cost object and is a result solely of the cost object. (lye used to make soap bars)
Indirect Cost: a cost that supports more than one cost objects, and must be "allocated" to those various cost objects (electricity at soap plant) |
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Term
| Three Major Product Costs: |
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Definition
Direct Material: sheet metal, tires, fabric
Direct Labor: assembly line workers
Overhead: facility costs, indirect labor, machine set up costs, quality control, etc. |
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Term
| Explain: Variable, Fixed, and Mixed costs |
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Definition
Variable Costs: cost varies directly with changes in activity. Unit fixed cost remains constant.
Fixed costs: total fixed cost remains constant as activity changes. Unit fixed cost varies.
Mixed costs: costs that have both a fixed and a variable cost component. |
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Term
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Definition
Division of Labor 1776:
Tasks are subdivided into individual jobs
Employees perform only the tasks relevant to their specialized function
Jobs tend to be small, but they can be performed efficiently
Proposes that production can be increased by dividing labor on to similar tasks |
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Term
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Definition
Scientific Management 1911: Developed standard mathod for performaing each job
Selected workers with appropriate abilities for each job.
Trained workers in standard method.
Provided wage incentives to workers for increased output.
Did not acknowledge variance among workers.
Did not appreciate social context of work and higher needs of workers. |
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Term
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Definition
Bureaucracy:
Looked at organization as a whole
Organizations needed division of labor with clear
definitions of authority and responsibility.
Positions organized in a hierarchy of authority. |
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Term
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Definition
| 14 General Principles of Management developed by Henri Favol |
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Term
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Definition
Hierarchy of Needs:
Proposes that individuals have a hiearchy of needs that need to be fulfilled in order.
The hierarchy includes: physiological needs, safety, belongingness, esteem, and self-actualization |
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Term
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Definition
prposed Theory X and Theory Y view of management.
Theory X: employees dislike work and must be threatened with punishment.
Theory Y: employees like work, self-direction and seek responsibility and have creativity. |
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Term
| Tuckman's stages of team development(4) |
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Definition
Forming - orientation break the ice
Storming - marked by conflict disagreement
Norming - establishment of order and cohesion
performing - marked by cooperation and problem solving. |
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Term
| Expectancy Theory of Motivation |
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Definition
| Expectancy Theory of Motivation: effort will lead to increased performance and that performance will lead to some expected outcome (bonus, promotion, etc.) the greater my motivation will be. |
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Term
| Equity Theory of Motivation |
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Definition
| Equity Theory of Motivation: Effort and rewards is affected by perception of others in the organization...when receiving rewards, it does not appear equitable, motivation drops. (based on perceived value of rewards) |
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Term
| Leadership: TRANSACTIONAL LEADERSHIP |
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Definition
| IS A TRANSACTION OR EXCHANGE PROCESS BETWEEN LEADERS AND FOLLOWERS. Could mean more work for more pay or more work for additional time off. |
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Term
| Leadership: TRANSFORMATIONAL LEADERSHIP |
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Definition
| is characterized by the ability to bring about significant change in followers and the organization |
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Term
| Leadership: GREAT MAN APPROACH |
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Definition
| a leadership perspective that sought to identify the inherited traits leaders possessed that distinguished them from people who were not leaders. |
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Term
| Leadership: LEADER MEMBER EXCHANGE |
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Definition
| Belief that leadership is individualized for each subordinate. Each dyad involves a unique exchange independent of other dyads. Puts employees into either in-group or out-group categories. |
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Term
| Leadership: IN-GROUP and OUT GROUP |
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Definition
IN GROUP: treats employees well in a more transformational manner. Empowering employees. (Theory Y)
OUT-GROUP: treats employees very transactional giving explicit direction (theory X) |
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Term
| Leadership: FIEDLER's CONTINGENCY MODE |
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Definition
| model designed to diagnose weather a leader is task-oriented or relationship-oriented and match leader style to the situation |
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Term
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Definition
| Contingency approach to leadership on which the leaders responsibility is to increase subordinates motivation by clarifying the behaviors necessary for task accomplishment and rewards. |
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Term
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Definition
| A picture of a ambitious, desirable future for the organization or team |
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Term
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Definition
| Defines whether a person places the primary responsibility for what happens to him or her within himself/herself or on outside forces |
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Term
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Definition
| The belief that power and status differences should exist in an organization |
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Term
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Definition
| The extent to which team members depend on each other for information, resources, or ideas to accomplish their tasks. |
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Term
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Definition
| The set of key values, assumptions, understandings, and norms that is shared by members of an organization and taught to new members as correct |
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Term
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Definition
Organizations reason for existing
Broadly states the basic scope and operations that distinguishes it from similar types of organizations |
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Term
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Definition
| A desired future that the organization attempts to realize |
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Term
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Definition
| A blueprint specifying the resource allocations, schedules, and other actions, necessary for attaining goals. |
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Term
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Definition
| Determining the organizations goals and the means for achieving them the most fundamental management function the most controversial management function |
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Term
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Definition
| Set of decisions and actions used to implement strategies that will provide a competitively superior fit between the organization and its environment so as to achieve organizational goals. |
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Term
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Definition
| Ability to percieve and express emotion, assimilate emotion in thought, understand and reason with emotion, and regulate emotion in oneself and others. |
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Term
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Definition
| A team made up of geographically or organizationally dispersed members who share a common purpose and are linked primarily through advanced information technologies |
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Term
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Definition
| Extent that people value independence and person uniqueness. Individualists tend to value personal freedom, self-sufficiency, control over themselves, being appreciated for unique qualities. |
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Term
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Definition
| Extent that people value duty to groups to which they belong, and value group harmony. Collectivists tend to identify themselves by group membership and value harmonious relationships with their members. |
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Term
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Definition
| Extent that people accept unequal distribution of power in a society. |
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Term
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Definition
Making inferences about the causes of an individuals behavior.
Example: Internal-failure due to self motivation
External- failure due mailly to factors beyond control: luck, resources |
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Term
| Fundamental attribution error |
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Definition
| attributing own actions to external factors and others actions to internal factors |
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Term
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Definition
| attributing our successes to internal factors and our failures to external factors |
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Term
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Definition
| principals and standards that guide behavior within the business community. Ethical or unethical behavior is often determined by the organizations stakeholders. |
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Term
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Definition
Those whose continued association is absolutely necessary for a firms survival.
Employees, customers, investors, government, etc. |
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Term
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Definition
Do not typically engage in transactions with a company and thus are not essential for its survival.
Media, trade associations, special interest groups, community |
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Term
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Definition
| a comprehensive written statement serves as the guidelines, principals, and rules of conduct for a company |
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Term
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Definition
| Exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group. |
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Term
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Definition
| A general term relating to a formal system of accountability, oversight, and control to limit unethical behavior in corporations. |
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Term
| Federal Sentencing Guidelines for Organizations |
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Definition
| Passed by congress in 1991 focused on guidelines for organizations, they were exempt from extreme penalties if one of there employees acted unethically. |
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Term
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Definition
| Any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression |
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Term
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Definition
| Refers in particular to the principles or rules that people use to decide what is right or wrong |
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Term
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Definition
| Adopted by congress in 2002 to address that loss of corporate regulations necessary to protect the public. Also to address the loss in confidence in financial reporting and corporate ethics. |
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Term
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Definition
| Refers to an organizations obligation to maximize its positive impact on stakeholders and to minimize its negative impact. |
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Term
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Definition
| Exposing an employer's wrongdoing to individuals outside the organization/company. Thee outsiders may be the media or government regulators. |
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Term
| Moral Philosophy: TELEOLOGY |
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Definition
| a general or moral philosophy which states that acts are morally right or acceptable if they produce some desired result, such as realization of self interest or unity. (egoism (good for oneself) or utilitarianism (good for the group)) |
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Term
| Moral Philosophy: DEONTOLOGY |
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Definition
| focuses on the preservation of individual rights and on the intentions associated with a particular behavior rather than on its consequences |
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Term
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Definition
| takes cultural norms into consideration and therefore there can be no absolute right or wrong. |
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Term
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Definition
Assumes that what is moral in a given situation is not only what conventional morality requires, but also what the mature person with a good moral character would deem appropriate.
IMMANUEL KANT argued that there are some things that ought to be done, and others that ought not to be done merely by virtue of being rational. |
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Term
| Business Finance: The goal of the firm? |
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Definition
| In finance, the commonly accepted goal of profit maximization is replaced with the more complete goal of the maximization of shareholder wealth. |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): Current Ration and Acid Test ratio |
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Definition
Current Ratio: current assets/current liability
Acid Test Ratio: cash+accounts receivable / current liabilities |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): Operating return on assets and operating profit margin |
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Definition
Operating return on assets: operating profits/total assets
Operating profit margin:operating profits/sales |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): Return on Equity |
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Definition
| Return on equity = net income/common equity |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): Debt ratio |
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Definition
| Debt Ratio = total debt / total assets |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): Price/earnings ratio |
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Definition
| price/earnings ratio = price per share / earnings per share |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): price/book ratio |
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Definition
| price/book ratio = price per share / equity book value per share |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): earnings per share |
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Definition
| earnings per share = net income / number of shares |
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Term
| Financial Ratio Analysis(evaluate a firms financial performance): equity book values per share |
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Definition
| equity book value per share = common equity / number of shares |
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Term
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Definition
| A dollar received today is worth more than a dollar received in the future. |
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Term
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Definition
a series of equal dollar payments that continue for a specific number of years.
ordinary annuity:payments occur at end of each period.
Annuity Due: payments occur at the beginning of each period. |
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Term
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Definition
| is an annuity that continues forever. |
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Term
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Definition
| is "a rule of conduct or action prescribed or formally recognized as binding or enforced by a court of law or other agency". |
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Term
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Definition
| the doctrine under which courts adhere to precedent on qustions of law in order to insure certainty, consistency, and stability in the administration of justice with departure from precedent permitted for compelling reasons (adhere to a precedent) |
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Term
| The US court system is developed from ___? |
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Definition
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Term
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Definition
| The supreme law of the US |
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Term
| Branches of the Federal Government: |
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Definition
| Executive Branch, Legislative Branch, Judicial Branch |
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Term
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Definition
| are compacts or agreements made between our nation and other nations of the world. |
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Term
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Definition
| written laws enacted by the legislative branch of either the federal or state governments |
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Term
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Definition
| These are laws of local government bodies |
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Term
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Definition
| executive orders issued by our president who is a member of the executive branch of our federal government |
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Term
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Definition
| these are decisions about an individual lawsuit by federal or state courts. |
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Term
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Definition
| consists of the rules,orders, and decisions of administrative agencies. These agencies are often given rule making, investigation, and enforcement powers |
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Term
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Definition
| Criminal Law and Civil Law |
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Term
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Definition
Criminal Law: is that area of the law that defines crimes. (Crimes = subject to imprisonment)
Civil Law: concerned with money damages or a person's status. |
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Term
| Two divisions of criminal law: |
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Definition
Felonies: punishment over a year
Misdemeanors: punishment under a year |
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Term
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Definition
| Tort: a civil wrong committed against a individual. (negligence, malpractice, etc.) |
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Term
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Definition
| agreement between two or more persons to do, or to refrain from doing something in exchange for something of value. |
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Term
| Key elements of a binding contract: |
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Definition
Competent Parties (not drugged, mentally impared, etc.)
Minors (must be 18)
Consideration (each side must contribute something of value)
Mutual Assent (each side must be clear - write it down) |
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Term
| Uniform Commercial Code (UCC) |
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Definition
One uniform act that has been promulgated in attempts to harmonize the law of sales and other commercial transactions in all 50 states.
It covers things such as sale of goods, credit, and bank transactions. All states have adopted the entire UCc except Louisiana that only adopted parts of it. |
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