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BE 4.01
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 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 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 share holders. |
| 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 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 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 a 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 involves 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 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 specialized book or computer program in 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. |
| 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:
angelo.g828
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