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401 Key Terms
Role of Finance/Accounting
| Term | Definition |
|---|---|
| Accounting | The process of keeping and interpreting financial records |
| Account payable | All monies owed by the business to others |
| Accounts receivable | All monies owed to a firm by its customer |
| Acquisition of funds | Finance activity involving making decisions about financing |
| Administration of assets | Finance activity involving making decisions about a firms investments |
| Assets | Anything of value that a business or individual own |
| Capital budgeting | A process in which a firms financial managers determine which projects it should invest in |
| Capital investment decisions | Decisions that determine which projects a business will investment in, how the investment will be financed, and whether to pay dividends to shareholders |
| Capital structure | A firms 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 the products made from those raw materials |
| Debt funding | Using money that is lent by the bank or other institution yo finance a project |
| Dividend | A sum of money paid to an investor or stockholder as earnings on an investment |
| Equity funding | Using money from investors to finance a project in exchange for shares in the company |
| 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 ii itself |
| Venture capital | Invested money used for new business opportunities |
| Working capital management | Management of a firms current balance of assets and liabilities; involves accounts payable and receivable, inventory, and cash |
| Accountant | An individual who has specialized training in accounting procedures |
| 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 |
| Balance sheets | A financial statement that captures the financial condition of the business at that particular moment |
| Bookkeeping | The steps of the accounting cycle that involves recording each business transaction; the process of analyzing financial transactions, journalizing transactions, posting to ledgers and balancing the books |
| Cash | Currency and cash |
| 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 accounting information |
| Income | Money received by a business or an individual from outside sources |
| Income statement | A financial summary that shows how much money the business has made or has lost; also called the profit-and-loss statement |
| Investors | Those who invest their funds in a business; may be owners or stockholders |
| Journal | A special book or computer program in which a business's transaction are recorded in the order in which they occur |
| Ledger | The accounting record for a specific department 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 |
| Net worth | The total value of the business |
| Owners 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 balance; used to check the accuracy of journal and ledger entrties |
| Finance | Funding a business activity or project in exchange for shares in the company |
Created by:
Jason.f129
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