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Small Business Ch 10

Small Business Management Ch 10

QuestionAnswer
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.
Created by: dengler