Unit 2 Vocabulary
What are accounts receivable?
Money owed to a company by its debtors
What is a sales cycle?
The course of time between the initial contact being make with a customer, the identification of services or goods to be procured, the acceptance of the intended purchase, and the transaction that completes the sale.
What category of an income statement indicates total profit?
Gross profit
What is cash flow?
The movement of funds going in and out of a business.
a tax on earned and unearned income.
Income tax
A reduction in the value of an asset with the passage of time, due in particular to wear and tear.
Depreciation
In a short sales cycle, you can get a lot of quick hits. Is this an advantage or disadvantage of a short sales cycle?
Advantage
Items of value are listed under which of the following components of the balance sheet
assets
Selling an asset is an example of money going in or out of the business?
taxes that are automatically deducted from your paycheck.
payroll taxes
A company's total assets are equal to the sum of its liabilities and its shareholders' equity.
Accounting equation
Credit card statements, bank deposit slips, and pay stubs are all examples of which type of financial information?
Personal financial information
Why is an income statement useful to a business?
it tells a business where money came from and where it went
Receiving a loan from the bank is money flowing in or out of the business?
Cash flowing into the business
When a business charges a higher price for a product instead of charging a tax in addition is which type of business tax?
excise tax
What are costs of goods sold?
The direct costs of producing the goods sold by a company.
What are the 4 characteristics of useful financial information?
Understandable, comparable, reliable, relevant
Income left over once all expenses are paid.
profit
What is the largest expense that a business typically takes on?
Operating expenses
a tax on purchased goods and services.
sales tax
The action of spending funds.
Expenditure
What is the purpose of a variance report?
identify differences between the planned financial outcomes (budget) and the actual financial outcomes (actual).
Which component of a balance sheet represents whatever value is left in a business after liabilities have been subtracted from assets?
Onwer's equity
How do businesses keep track of cash flow?
They create a cash flow statement.
Individuals with higher incomes pay a higher percentage of their income in taxes compared to lower earners in which tax structure?
progressive tax structure