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Chapter 3 vocab
Question | Answer |
---|---|
business financial goals | direction for financial plans of a business |
creditor | individual or organization that provides funds to a business with repayment agreement with interest set for a future date |
principal | amount of money borrowed |
interest | amount paid for money borrowing privileges |
collateral | asset promised by a business to a creditor if loan repayment isn't completed |
financial statement | reports prepared according to accepted accounting standards providing financial information of an enterprise |
balance sheet | statement of a financial position, identifies assets, liabilities, and equity of business on a specific date |
assets | things businesses own and use as part of business operations |
depreciation | decline in value of asset as it ages |
liabilities | things businesses owe to others |
owner's equity | total value that all owners and investors have in a firm |
income statement | provides view of financial changes in a business that have occurred during specific time period |
cash flow statement | prepared to show hoe cash is used by a business during specific time period |
financial budget | projected financial statement for specific future time period |
budget discrepancies | differences between budgeted amounts and financial performance, to improve future budgeting and recognize effects on financial factors |
operating budget | projects all income and expenses for the operations of a business for a specific future time period |
capital budget | plan to acquire and finance long-term assets of a business |
trend analysis | examines financial performance over several periods of tie to determine patterns |
interest rates | cost of borrowing money, expressed as the percentage of borrowed amount, usually over 1 year time period |
future value | FV, is amount to which and amount of money will grow in a defined time period at specified investment rate |
time value of money | difference in purchasing power of amount of money at future date |
present value | current value of amount of money to by received at future date based on specified investment rate |