CHAPTER9
Production management is .......
term used to describe all the activities managers do to help their firms create goods.
What is accounting and accounting cycle?
Accounting is the recording, classifying, summarizing, and interpreting of financial events and transactions that affect an organization.
The accounting cycle is the 6 step procedure that results in the preparation and analysis of major financial statements.
What are 3 common reasons that firms fail financially?
1) Undercapitalization, (2) Poor control over cash flow, (3) Inadequate expense control
Name one major stock exchange?
The New York Stock Exchange ... or any others
What are the 5 standards for useful form of money ?
(1) Portability, (2) Divisibility, (3) Stability, (4) Durability, (5) Uniqueness
1. Inputs, 2. Production Control, 3. Outputs
What are the three key financial statements of a business?
1. Balance sheet , 2. Income statement, 3. Statement of cash flows
What are 3 forms of equity financing?
A business can obtain equity financing from the sale of company stock, from retained earnings, or from venture capital firms.
What are the two types of stock and how do they differ?
Preferred stock( stock that gives its owners preference in the payment of dividends and an earlier claim on assets) and Common Stock (Elect members of the company’s board of directors and vote on important issues affecting the company Share in the firm’s profits through dividends)
What is a credit union?
A credit union is a member-owned cooperative that offers everything a bank does-it takes deposits, allows you to write checks, and make loans. It also may sell life insurance and offer mortgages. Credit union interest rates are sometimes higher than those of banks, and loan rates are often lower.
What is the difference between facility location and layout?
Facility location is the process for selecting a geographic location for a companies operations. Facility layout is the physical arrangement of resources, including people, to most efficiently produce goods and provide services for customers. Facility layout reduces a factory's costs in the long term.
What is the income statement?
The financial statement that shows a firm’s profit after costs, expenses, and taxes over a period of time; it summarizes all of the resources that have come into the firm (revenue), all of the resource es that have left the firm, and expenses, and the resulting net income or net loss.
What is collateral?
Collateral is the promise from a borrower to a lender of security assets of a loan.
Preferred Stock is....(3 C's)?
Callable, Convertible, Cumulative
What is the long term effect of the Fed decreasing the reserve requirements?
The economy will speed up.
What is MRP, ERP and how are they different?
ERP is a a newer version of MRP, which combines the computerized functions of all the divisions and subsidiaries of the firm
What is the difference between a public and private accountant?
A private accountant works for a single firm while a public accountant provides their services to individuals or businesses
What is the difference between the short-term forecast and long-term forecast? Why are they important?
The short-term forecast predicts revenues, costs, and expenses for a period of one year or less and the long-term forecast predicts revenues, cost, and expense for a period longer than 1 year. Financial forecast are important because they give some sense of the income or profit potential of different strategic plans while also predicting the cash inflows and outflows in future periods.
What is a Stock Split and why companies do it?
A stock split is a high per-share price that can push companies to issue two or more shares for every one that is outstanding. Companies do it when price per share becomes too high.
What is the FDIC and what type of bank does it mostly cover?
It is an independent agency of the US government that insures bank deposits. It covers mostly commercial banks.
How do CAD/CAM systems work?
Design changes made in computer-aided design (CAD) are instantly incorporated into the computer-aided manufacturing (CAM) process. The linking of CAD and CAM is computer-aided manufacturing (CIM).
What are the six steps of the accounting cycle?
(1) Analyzing documents, (2) Recording information into journals, (3) Posting that information into ledgers, (4) Developing a trial balance, (5) Preparing financial statements, and (6) Analyzing financial statements
What are capital expenditures?
They are major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights.
Give 1 advantage and one disadvantage of issuing stock?
Advantages:
1. As owners of the business, stockholders never have to be repaid on their investment.
2. There's no legal obligation to pay dividends to stockholders.
3. Selling stock can improve the condition of a firm's balance sheet.
Disadvantages:
1. As owners, stockholders have the right to vote for the company's board of directors.
2. Dividends are paid from profit after taxes and are not tax-deductible.
3. The need to keep stockholders happy affect managers' decisions
Commercial banks vs. savings and loan associations vs. credit unions?
Commercial Bank: profit seeking, receives deposits, makes loans with those deposits. Savings and loan associations: accept savings and checking deposits, provide home mortgages Credit unions: nonprofit, member-owned, offer full variety of banking services to customers