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4.01 key term
Role of Finance and nature of 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 customer |
| Acquisition of funds | Finance activity involving making decisions about a firm's investment |
| 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 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 | Ration that refers to the number of days between a company pay for raw materials and receiving from selling the 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 on an investment |
| Equity funding | Using money from investors 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 though 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 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 had specialized training in accounting procedures |
| Accounting | The process of keeping financial records |
| Accounting cycle | A process or series of steps that business complete to maintain their financial records effectively |
| Accounting standard | Rules that accountant must follow when preparing financial statements |
| Accounting systems | The methods and procedures used in consistently handling the business 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 own |
| Balance sheets | A financial statement that captures the financial condition of the business at the particular moment |
| cash | currency and coins |
| Cash accounting method | An accounting cycle method in which income and expenditure are recorded at the time the money changes hand |
| Cash flow statement | A financial summary with estimates as to when, where. and how much money will flow and out of a business |
| Credit | The arrangement by which businesses or individual can purchase and pay later |
| Expenditures | The monies that a business spends; also called expenses |
| Expenses | the monies that 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 |
| Financial statement | A summary of accounting information |
| Income | by a business or an individual from outside sources |
| Income statement | A financial summary that shows how much money the business has made or lost; also called the profit and loss |
| Investors | Those who invest their funds in business, may be owners or stockholder |
| Journal | A special book or computer program which a business's transactions 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 |
| 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, purchase, or a return |
Created by:
angel.c791
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