Sole Proprietorship |
business owned by one person who operates it for his or her own profit. |
Partnership |
consists of two or more owners doing business together for profit. |
Corporation |
entity created by law. |
Common Stock |
the purest & most basic form of coporate ownership. |
Dividend |
Periodic distributions of cash to the stockholders of a firm. |
Board of Directors |
group elected by the firm’s stockholders responsible for approving goals and plans, corporate affaris, and expendiures. |
Shareholders (stockholders) |
owners of a coporation whose ownership takes the form of either common or perferred stock. |
Treasure |
Firm’s cheif fiancial manager who manges the firm’s cash,oversee’s it pensionplans, and manages key risk. |
Controller |
Firm’s cheif accoutant, who is responsible for firm’s accounting activites as tax management, financial & cost accounting. |
Accrual Basis of Accounting |
preparation of finacial statements recongizes revenue at the time of the sale & recongizes expenses when they are incurred. |
Cash Basis of Accounting |
Recongizes revenue & expenses only with respect to acutal inflows and outflows of cash. |
Risk |
Chance that actual outcomes may differ from those expected. |
Risk Adverse |
Requiring compensation to bear risk. |
Financial Markets |
Forums in which suppliers of funds and demanders of funds can transact business directly. |
Financial Markets |
Forums in which suppliers of funds and demanders of funds can transact business directly. |
Common Stock |
Purest & most basic form of corporate ownership. |
Preferred Stock |
Special form of ownership having a fixed periodic dividend that must be paid prior to payment or any dividend to common stock. |
Corporate Bonds |
Long term debt instrument indicating that a corporation has borrowed money and promises to repay it. |
Capital Stock |
Authorized shares, max number of shares authorized under the corporations terms. |
GAAP |
Practice & procedure guidelines used to prepare and maintain financial records and reports. |
FASB |
Accounting professions rule-setting body, which authorizes generally accepted accounting principles. |
Balance Sheet |
Summary statement of the firm’s financial position at a given point in time. |
Income Statement |
Provides a financial summary of the firm’s operating results during a specified period. |
Current Assets |
Short-term assets, expected to be convered to cash in less than a year. |
Current Liabilties |
Short-term liabilities expected to be paid within a year. |
Long-term Liabilties |
Liabilties with a future benefit over 1 year. example: notes payable |
Statement of Retained Earnings |
Reconcils the net-income of the year. And cash dividends paid, with the cahnge in retained earnings from Beg. and End. |
Retained Earnings |
Cumulative Total of all earnings net of dividends that have been retained & invested in the firm. |
Paid-in-Capital |
Amount of proceeds in excess. |
Statement of Cash Flow |
Provides a summary of the firms operating investments and finacing cash flow and reconcils the changes. |
Ratio Analysis |
Involves methods of calculating and inerpreting financial ratios to analyze and monitor the firm’s performance. |
Current Ratio |
Measures of liquidity calculated by dividing the firms current assets by its current liabilties. |
Quick (Acid-Test) Raio |
Measures of liquidity calculated by dividing the firms current assets minus inventory by its current liabilties. |
Depreciation |
Time period over which an asset is depreciated. |
Pro-Forma Financial Statement |
Projected ,or forecast, income statements and balance sheets. |
Present Value |
Current dollar value of a future amount. Then invested today at a given interest rate over a specified period to equal the future amount. |
Ordinay Annuity |
An annnity for which cash flows occurs at the end of each period. |
Perpetuity |
An annuity wtih ininite life, providing continus annual cash flows. |
Future Value |
The value at a given future date of an amount placed on a deposittoday and earning interest at a specified rate. Apply compound interest over a specified period of time. |