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Small Business Ch 10
Small Business Management Ch 10
Question | Answer |
---|---|
Accounts Payable (Trade Credit) | Financing provided by a supplier of inventory to a given company. |
Accounts Receivable | The amount of credit extended to customers that is currently outstanding. |
Accrual-Basis Accounting | An accounting method of recording profits when they are earned, whether or not the profits hace been received in cash; additional expenses are recorded when they are incuured, even if payment had not been made. |
Accured Expenses | Short-term liablilities that have been incurred but not paid. |
Accumulated Depreciation | Total depreciation expense taken over the asset's life. |
Balance Sheet | A financial report showing a firm's assets, liabilities, and ownership equity at a specific point of time. |
Cash Flow Statement | A financial report showing a firm's sources of cash as well as its uses of cash. |
Cash-Basis Accounting | An accounting method of recording profits when cash is received and recording expenses when they are paid. |
Cost of Goods Sold | The cost of producing or acquiring goods or services to be sold by a firm. |
Current Assests | Assets that can be converted into cash within a company's operating cycle. |
Current Debt (Short-Term Liabilities) | Borrowed money that must be repaid within 12 months. |
Current Ratio | A measure of a company's relative liquidity, determined by dividing current assests by current liabilities. |
Debt | Business financing provided by creditors. |
Debt Ratio | A measure of what percentage of a firm's assets are financed by debt, determined by dividing total debt by total assets. |
Depreiable Assets | Assests whose value declines, or depreciates, over time. |
Depreciation Expense | The cost of a firm's buliding and equipment, allocated over their useful life. |
Financial Statements (Accounting Statements) | Reports of a firm's performance and resources, including an income statement, a balance sheet statement, and a cash flow statement. |
Fixed Assets | Relatively permanent assets intended for use in the business, such as plant and equipment. |
Gross Fixed Assets | Original cost of depreciable assets before any depreciation expense has been taken. |
Gross Profit | Sales less the cost of goods sold. |
Income Statement (Profit and Loss Statement) | A financial report showing the profit or loss from a firm's operations over a given period of time. |
Interest Expense | The cost of borrowed money. |
Inventory | A firm's raw materials and products held in anticipation of eventual sale. |
Liquidity | The degree to which a firm has working capital available to meet maturing debt obligations. |
Long-Term Debt | Loans from banks or other sources with repayment terms of more than 12 months. |
Mortgage | A long-term, loan from a creditor for whcih real estate is pledged as collateral. |
Net Fixed Assets | Gross fixed assets less accumulated depreciation. |
Net Profits | Income that may be distributed to the owners or reinvested in the company. |
Operating Expenses | Costs related to marketing and selling a firm's product or service, general and administrative expenses, and depreciation. |
Other Assests | Assets other than current assets and fixed assets, such as patents, copyrights, and goodwill. |
Ownership Equity | Owners' investments in a company plus profits retained in the firm. |
Profits Before Taxes (Taxable Profits) | Earings after operating expenses and interest expenses but before taxes. |
Retained Earings | Profits less withdrawals (dividends) over the life of a business. |
Return on Assets | A measure of a firm's profitability relative to the amount of assets invested in the company, determined by dividing operating profits by total assets. |
Return on Equity | A measure of the rate of return owners of a firm receive on their equity investment, calculated by dividing net profits by common equity. |
Short-Term Notes | Cash amounts borrowed from a bank or other lending sources that must be repaid within a short period of time. |
Total Asset Turnover | A measure of how efficiently a firm is using its assets to generate sales, calculated by dividing sales by total assets. |