Finance
Define Finance.
DAILY DOUBLE: Define Financing.
Finance is the business function
involving money management matters.
DD: Financing is concerned with funding a business venture.
Define Accounting.
DAILY DOUBLE: Define the two types of accounting methods (Hint: based on physical currency or credit)
The process of keeping and interpreting financial records.
DD: Cash Accounting and Accrual Accounting (Not mutually exclusive but you don't want to double-log transactions).
Cash Accounting Method: record income and expenditures at the time the money changes hands. This means that the business enters the amount of a transaction into one of its journals on the day the money is received from a customer or paid out to a creditor. The same goes for the business when it buys supplies from a vendor on credit.
Accrual Accounting Method: journalize income and expenditures at the time they occur, even if no money changes hands at that time. This means that the business enters the amount of a transaction into the appropriate journal when a customer makes a credit purchase, or when the business orders goods from a supplier. No money changes hands at the time, but the business’s records indicate the transaction as either income or an expense.
Define Marketing.
The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.
A type of business ownership in which one or more of the owners does not have full liability is called a:
limited partnership.
The main two goals of finance:
1. Ensuring the business is profitable
2. Reducing financial risk
Define Accounts Receivable and Accounts Payable
Accounts Receivable: Money or debts owed to the business or individual (money you can expect to have)
Accounts Payable: Money or debts that the business or individual owes to some other entity (money you can expect to spend)
Define the Marketing Concept.
DAILY DOUBLE: Define the Societal Marketing Concept.
The Marketing Concept is a philosophy of conducting business that is based on the belief that all business activities should be aimed toward satisfying customer wants and needs while achieving company goals.
DD: The Societal Marketing Concept takes the marketing concept a step further and tries to benefit society at large while achieving company goals.
The Scott Company decided to sell stock to raise capital. Under what form of business organization does the company operate?
corporation
The focus and purpose of finance.
DAILY DOUBLE: The focus and purpose of accounting
Finance's Focus: money management decisions
Finance's Purpose: boost growth, reduce risks
DD: Accounting's Focus: recordkeeping activities
Accounting's Purpose: provide accurate and timely information
Define Equity, Assets, and Liabilities
Equity: The amount remaining after the difference between assets and liabilities has been calculated (Net Worth)
Assets: Anything the business or individual owns that is valuable
Liabilities: Any debts that the business or individual owes
Name three elements of the marketing concept.
1. Customer orientation (Do it the customer’s way.)
2. Company commitment (Do it better.)
3. Company goals (Do it with success in mind.)
Characteristics of a sole proprietorship (name three)
Owned by a single person, who accepts all the liability as well as all the profit. Typically smaller, local companies that are run by entrepreneurs.
Distinction between Capital Investment Decisions and Working Capital Management.
DAILY DOUBLE: The official terms of the financial functions that determines which and how projects will be financed
Capital investment decisions — long term
1. Which projects to invest in
2. How to finance
3. Whether to pay dividends
Working capital management — short term
1. Current balance of assets and liabilities
2. Accounts payable and receivable, inventory, and cash
DD: Capital budgeting is determining which projects to invest in (Is this going to be a profitable investment?), whereas Capital Structure is the actual organization of how the project is funded (through, debt, assets/cash/capital, or equity funding)
What are income and balance sheets? How are they distinct?
DAILY DOUBLE: This is a statement that estimates when, where, and how much money will flow into and out of a business during a specific period of time.
An income statement/sheet (also called a profit-and-loss statement) shows the remaining profit (net profit) of a business or individual after their expenses (cost of goods and operating expenses) have been calculated during a certain timeframe, usually a year.
A balance sheet is a snapshot of a business's of individual's net worth at a given point in time. It shows their equity or net worth (which is all their assets minus all their liabilities).
DD: What is a Cash-Flow Statement?
Name and explain four types of marketing activities (we learned about six this semester).
DAILY DOUBLE: Give examples of those four.
DAILY TRIPLE: (Only available if you've done the double) Name and give examples for the other two types of marketing activities.
1. Putting products where they need to be
2. Communicating with customers
3. Determining how much to charge for the products
4. Offering the products customers want
5. Finding out about customers
6. Planning how to carry out the marketing process
DD/DT: I've already given the six types. Examples are on the PPT.
What is the Cash Conversion Cycle? Why is this a part of business management?
The Cash Conversion Cycle tells us how long money is“tied up” between buying raw materials and receiving cash from selling products. It is a part of business management because it is a key component
of managing working capital, which is a responsibility of financial managers.
What is Return on (Invested) Capital? What does it tell us about a business?
A.It is a measure of how well a business generates cash flow in relation to the capital (both debt and equity) it has already invested into itself.
B.It is usually expressed as a percentage.
C.When return on capital is positive, the company is growing in value.
D.When it is negative, the company is losing value.
Name, correctly order, and explain the steps in the accounting cycle.
DAILY DOUBLE: Accountants have to follow these protocols. What are they called and why?
1. Analyze financial transactions (Review information)
2. Journalize transactions (Record/document information)
3. Post to ledgers (Upload information to department's "books" for storage)
4. Balance the books (Synthesize the new information with existing information to ensure that everything looks good; report commentary)
DD: Accountants must follow Accounting Standards because the IRS compares financial data/accounting information from companies across the US and conducts audits to see if they're accurating reporting their income, spending, and tax contributions.
Identify three of each: Marketing’s Impact on Society and Marketing’s Benefits
Marketing’s Impact on Society: Makes the world go round, Makes business possible, Influences your decisions every day (Explain how)
Marketing’s Benefits: Makes our lives better with new and improved products at lower prices; provides us with a variety of goods and services (many styles, models, colors, and sizes); and, it encourages trade between nations
Name the five functions of management.