BUSN 101 Tamu - Final Exam Review
Accounting - ANS-The process of collecting, recording, classifying, summarizing,
reporting, and analyzing financial activities.
Financial Accounting - ANS-Accounting that focuses on preparing external financial
reports that are used by outsiders such as lenders, suppliers, investors, and
government agencies to assess the financial strength of a business.
Managerial Accounting - ANS-Accounting that provides financial information that
mangers inside the organization can use to evaluate and make decision about current
and future operations.
Auditing - ANS-The process of reviewing the records used to prepare financial
statements and issuing a formal auditor's opinion indicating whether the statements
have been prepared in accordance with accepted accounting rules
Balance Sheet - ANS-A financial statement that summarizes a firm's financial position at
a specific point in time.
Assets - ANS-Things of value owned by a firm.
Liabilities - ANS-What a firm owes to its creditors; also called debts.
Owners' Equity - ANS-The total amount of investment in the firm minus any liabilities;
also called net worth. Includes owners' investments (stock issued for a public company),
net income, minus dividends since the inception of the company.
Income Statement - ANS-A financial statement that summarizes a firm's revenues and
expenses and shows its total profit or loss over a period of time.
Revenues - ANS-The dollar amount of a firm's sales plus any other income it received
from sources such as interest, dividends, and rents.
Expenses - ANS-The costs of generating revenues.
, Cost of Goods Sold (COGS) - ANS-The total expense of buying or producing a firm's
goods or services.
Gross Profit - ANS-The amount a company earns after paying to produce or buy its
products but before deducting operating expenses.
Gross Profit = Revenue - COSG
Net Profit - ANS-Subtract other expenses from gross profit.
Net Profit = Gross Profit - Business Expenses (Operating costs, etc.)
Finance - ANS-
Financial Management - ANS-The art and science of managing a firm's money so that it
can meet its goals.
Financial Planning - ANS-Preparing the financial plan, which projects revenues,
expenditures, and financing needs over a given period.
Investment (spending money) - ANS-Investing the firm's funds in projects and securities
that provide high returns in relation to their risks.
Financing (raising money) - ANS-Obtaining funding for the firm's operations and
investments and seeking the best balance between debt (borrowed funds) and equity
(funds raising through the sale of ownership in the business).
Commercial Banks - ANS-Profit-oriented financial institutions that accept deposits,
make business and consumer loans, invest in government and corporate securities, and
provide other financial services.
Investment Bankers - ANS-Help companies raise long-term financing. Firms that act as
intermediaries, buying securities from corporations and governments and reselling them
to the public.
Stockbroker - ANS-A person who is licensed to buy and sell securities on behalf of
clients.
Equity - ANS-A form of business financing consisting of funds raised through the sale of
stock (ownership) in a business.
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