Term
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Definition
The study of how people choose to allocate their scarce resources.
choices are influenced by demand, scarcity and price! |
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Term
| What are the three interdependent factors related to individual choice? |
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Definition
Demand= quality of a product or service desired by consumers
Scarcity= When availably of a resource does not meet current demands
Price= What one party must give to obtain what is offered by another party. |
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Term
| Macroeconomics vs. Microeconomics |
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Definition
Macro= Factors that affect some or even all sectors of the overall economy. (Global)
Micro= supply, demand, pricing issues at the firm level
(smaller scale) |
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Term
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Definition
Spending money, or choosing an option that could have been better used somewhere else.
Missed chances, foregone alternatives |
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Term
| Accounting Profit vs. Economic Profit |
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Definition
Accounting= earned when revenues exceed costs and expenses over a period of time
Economic= included after determining opportunity costs associated with the financial decision |
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Term
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Definition
Government operated
Non-profit
Sole proprietorship
Partnership
Subchapter S |
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Term
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Definition
San diego Padres
Ran by government
Greater access to information about financial operations |
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Term
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Definition
PGA Tour
Not conducted for profit of the owner |
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Term
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Definition
Business legally owned and operated by one owner
Most popular |
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Term
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Definition
General = Joining of two or more individuals to run business
Express= Created by contract between parties
Implied= Individuals act like partners, share checking account
Limited= Partners liable for their direct financial obligations
Can put other partners into bankruptcy and company |
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Term
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Definition
| Profits that flow from business to the shareholders and are only taxed once |
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Term
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Definition
| LLC= Easier to form, not as much paper work, operate like subchapter S |
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Term
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Definition
Double taxation
seek investors
forune 500 companies |
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Term
| Three levels of Govt. Influence on Economy |
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Definition
Capitalism = No messing with economy
Laissez Faire= Some govt stop with corporations
Socialistic= Govts steps in a lot with the economy |
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Term
| Federal Reserve Influence on economy |
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Definition
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Term
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Definition
| Rate at which banks may borrow money from the Fed. |
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Term
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Definition
| Rate at which banks charge another bank to borrow money through the Fed. |
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Term
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Definition
The rate banks charge their best customers
A few points higher than the fed. |
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Term
| How does Fed Influence money supply? |
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Definition
Regulate nations currency supply
Lend to banks
Guard the gold in federal reserve
Administrate the transfer of funds via checks |
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Term
| Three things a budget accomplishes? |
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Definition
| Motivation, communication, coordination |
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Term
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Definition
| Establishment of objective and the formulation, evaluation, and selection of the policies, strategies, tactics and actions to achieve those objectives. |
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Term
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Definition
| A prediction of future events and their quantification for the purpose of budgeting |
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Term
| Guidelines of forecasting |
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Definition
1) Extend past trends and make adjustments for known changes
2) Consider developing several forecasts under diff potential scenarios
3) Consider shortening the planning period
4) Conduct a forecast of large interrelated items rather than specific itemized amounts |
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Term
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Definition
Budget Time Horizon= immediate future <3 years
Business Planing horizon= 3 to 5 years
Strategic Planning horizon= Past 5 years |
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Term
| Two keys to successful budgeting? |
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Definition
Get input from the entire organization
Have means of sharing budget across the entire organization |
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Term
| Steps for Budget preparation |
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Definition
Link budgeting to strategic planning
Make budgeting procedures part of strategic planning
Spend less time collecting data and more time generating it
Govt agreement on summary budget first
Automate the collation and consideration of budgets |
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Term
| Four approaches to budgeting |
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Definition
a. Incremental
b. Program planning budgeting system
c. Zero-based
d. Modified zero-based |
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Term
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Definition
| form of line item budgeting in which next years budget arrived at by either decreasing or increasing last years budget |
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Term
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Definition
| expenditures based on programs of work and secondary on characteristics and objectives |
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Term
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Definition
| Every budget period you start fresh |
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Term
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Definition
Spending levels matched with services to be performed
Sport org use this form |
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Term
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Definition
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Term
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Definition
| Revenue, Expense, Cash, Capital Expenditure |
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Term
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Definition
| Forecast of revenues based on projections of the org sales |
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Term
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Definition
| Lists its primary activities and allocates a dollar amount to each |
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Term
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Definition
| Forecasts how much cash the org will have on brand and how much it will be used to meet expenses |
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Term
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Definition
| Allows mang. to forecast future capital req. to keep on top of important capital projects |
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Term
| What are the two major types on financing? |
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Definition
Equity and Debt
Equity= Raising capital by having investors own part of the company
Debt= borrowing money |
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Term
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Definition
| Annual return that an investor would requiring from a particular investment, whether in stocks or bonds |
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Term
| Factors influencing required rate of return |
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Definition
a. Production opportunities
b. Time preferences for consumption
c. Risk
d. Inflation |
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Term
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Definition
| The difference between a long term rate and a short term interest rate |
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Term
| Types of equity financing? |
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Definition
a. Shares
b. Retained earnings
c. Government funding
i. Direct
ii. Indirect
d. Gifts= big in college football |
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Term
| What are the different types of debt? |
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Definition
Bond= a promise to pay back borrowed money plus interest to the wage who is purchasing the bond
i. Par value, maturity, coupon rate, call provisions & premiums
ii. Current Yield
iii. Capital Gains Yield
iv. Convertible bonds |
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Term
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Definition
Loans
Trade credits
Bankruptcy |
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Term
| Advantages/Disadvantages of equity financing |
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Definition
Advantages= attract and retain key employees
increase equity allowing company to issue debt if needed
Disadvantages= cost of going public is substantial
loss of strategic flexibility |
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Term
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Definition
| Use of funds to acquire operational costs that will help the org earn future revenues or reduce future costs |
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Term
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Definition
| Use of funds to acquire operational assets that will help the org. in the short term and is completely written off during the same year as the expense is incurred. |
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Term
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Definition
Determine the initial cost of the project
Determine the incremental cash flow of a project
Select the capital budgeting method
Conduct a post audit analysis |
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Term
| Benefits of Capital Budgeting |
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Definition
plan amount of resources needed
develop and evaluate capital expenditures
help plan timing of necessary resources
maintain a positive ROI
focus attention on cash flows |
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Term
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Definition
analysis of potential additions to fix costs
long term decisions involving large expenditures |
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Term
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Definition
a. Payback period
b. Discounted Payback period
c. Net present value (NPV)
d. Internal rate of return (IRR)
e. Modified internal rate of return (MIRR)
i. Recommended in sports |
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Term
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Definition
| The cash flow created through the implementation of a new project |
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