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401 Key Terms
Role of Finance/Accounting
| Term | Definition |
|---|---|
| Accounting: | The process of keeping and interpreting financial records |
| Accounts payable: | All monies owed by the business to others |
| Accounts receivable: | All monies owed to a firm by its customers |
| Acquisition of funds: | Finance activity involving making decisions about financing |
| Administration of assets: | Finance activity involving making decisions about a firm's investments |
| Asset(s): | Anything of value that a business or individual owns |
| Capital budgeting: | A process in which a firm's financial managers determine which projects it should invest in |
| Capital investment decisions: | Decisions that determine which projects a business will invest in, how the investment(s) will be financed, and whether to pay dividends to shareholders |
| Capital structure: | A firm's mix of financing, usually some combination of debt and equity |
| Cash conversion cycle: | Ratio that refers to the number of days between a company paying for raw materials and receiving cash from selling products made from those raw materials |
| Debt funding: | Using money that is lent by a bank or other institution to finance a project |
| Dividend: | A sum of money paid to an investor or stockholder as earnings o an investment |
| Equity funding: | Using money from investor to finance a project in exchange for shares in the company |
| Finance: | In business, the function that involves all money and money management matters |
| Financing: | Funding a business activity or project through debt, equity, or venture capital |
| Return on capital: | A measure of how well a business generates cash flow in relation to the capital it has already invested in itself |
| Venture capital: | Invested money used for new business opportunities |
| Working capital management: | Management of a firm's current balance of assets and liabilities; involves accounts payable and receivable, inventory, and cash |
| Accountant: | An individual who has had specialized training in accounting procedures |
| Accounting: | The process of keeping financial records |
| Accounting cycle: | A process or series of steps that businesses complete to maintain their financial records effectively |
| Accounting standards: | Rules that accountants must follow when preparing financial statements |
| Accounting system: | The methods and procedures used in consistently handling the business's financial information |
| Accrual accounting method: | A method of accounting that records transactions at the time they occur even if no money changes hands at the time |
| Assets: | Anything of value that a business owns |
| Balance sheet: | A financial statement that captures the financial condition of the business at that particular moment |
| Bookkeeping: | The steps of the accounting cycle that involve recording each business transaction; the process of analyzing financial transactions, journalizing transactions, posting to ledgers, and balancing the books |
| Cash: | Currency and coins |
| Cash accounting method: | An accounting method in which income and expenditures are recorded at the time the money changes hands |
| Cash flow statement: | A financial summary with estimates as to when, where, and how much money will flow into and out of a business |
| Credit: | The arrangement by which businesses or individuals can purchase now and pay later |
| Expenditures: | The monies that a business spends; also called expenses |
| Expenses: | The monies that a business spends; also called expenditures |
| Financial accounting: | A type of accounting that involves preparing and reporting financial data to external users who are not directly involved in business operations |
| Financial statement: | A summary of accounting information |
| Income: | Money received by a business or an individual from outside sources |
| Income statement: | A financial summary thet shows how much money the business has made or has lost; also called the profit-and-loss statement |
| Investor: | Those who invest their funds in a business; may be owners or stockholders |
| Journal: | A special book or cumputer program in which a business's transactions are recorded in the order in wich they occur |
| Ledger: | The accountign record for a specific departament or area of the business |
| Liabilities: | Debts that the business owes |
| Managerial accounting: | A type of accounting that involves preparing and reporting financial data to internal users, usually managers, who need financial information to control day-to-day operations and to make financial decisions and plans affecting the business |
| Net worth: | The total value of the business |
| Owner's equity: | The amount an owner has invested in the business plus or minus profits and losses |
| Transaction: | A business activity such as a sale, a purchase, or a return |
| Trial balance: | The listing of a business's different accounts and their current balances; used to check the accuracy of journal and ledger entries |
Created by:
fernando.g754
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