DECA Business Finance
Terms in this set (81)
A type of accounting system that reports income when earned and expenses when incurred.
One company decides to buy most or all of another company's ownership in order to take control of that company.
Locale of buying, trading, and selling mid-term and long term capital and loans where financial institutions act as intermediaries.
Property that is offered to secure a loan or other credit and that becomes subject to seizure on default.
The act of accepting and meeting specific standards
The combining of two separate companies into one.
Sifting through large amounts of data to find the necessary information.
Dividend Reinvestment Plan (DRIP)
The option given to stockholders of a corporation to reinvest dividends received by purchasing whole or fractions of shares on the date of payment. Commissions may not be required to be paid when reinvesting in this way.
Money distributed from Retained Earnings to the owners of a business as profits.
Economies of Scale
The decrease of cost per unit that is a direct result from and increase in production. This can be accomplished because as production increases, the cost of producing each additional item falls. Businesses often buy in volume to take advantage of the discounted rates due to economies of scale.
An expert professional in finance that recommends individuals buy, sell, or hold securities or investments.
An establishment that provides financial services to clients. Banks, insurance brokers and investment firms are several examples.
Acquisition of a company by purchasing a controlling interest directly from stockholders or attempting to replace the current management.
Interest Rate Risk
The risk involved in investing because of the uncertainty of fluctuation in interest rates.
Internal Rate of Return (IRR)
Used in capital budgeting. The amount of growth, or return, expected of a capital budgeting project or investment.
When two companies both decide to combine and do business as one entity.
Trade in short-term and low-risk securities resulting in dividend earnings.
The total amunt of money a country's government has borrowed, by various means.
Net Present Value (NPV)
The difference between the current value of cash received and the current value of cash paid at a given interest rate for a given time period.
The time needed to earn back your initial investment.
Taking precautionary measures to prevent and minimize risk. Purchasing insurance is just one example.
Identifying, analyzing, and acting upon risks and uncertainties in decision-making.
A system used for computing the depreciation of some assets in a way that assumes that they depreciate faster in the early years of their acquisition.
A series of steps in recording a financial transaction from the time of occurrence to its reflection in the financial statements.
Money which you owe to an individual or business for goods or services that have been received but not yet paid for.
Money owed to your business for goods or services delivered but not yet paid for.
An examination of a company's financial records. The records are being checked for accuracy as well as supporting documentation.
An itemized statement that lists the total assets and total liabilities of a given business to portray its net worth at a given moment in time.
Break Even Point
The point of business activity when total revenue equals total expenses. Above the break-even point, the business is making a profit. Below the break-even point, the business is incurring a loss.
A projection of income and expenses over a future period.
The act of setting targets too low in budgeting so they are easy to achieve.
Money available to invest or the total of accumulated assets available for production.
Chart of Accounts
A list of account names and numbers in a company's ledger.
An accounting professional that oversees an accounting department and interacts with management to interpret and effectively use information from managerial accounting.
Cost-Volume Profit Analysis
Describes how profit and costs change with a change in volume. This accounting method is useful when making short-term decisions
A non cash expense that reduces the value of an asset. This decrease in value may be attributed to age or wear and tear on the item.
Electronic Funds Transfer (EFT)
A computer based system used to perform financial transactions electronically. A purchase on a debit card is an example of an EFT.
A variance that increases operating income relative to the budgeted amount. Whether or not a favorable variance is good or bad depends on what caused the variance.
Decisions made to determine how to obtain funds to acquire resources.
Standard accounting practice allows the accounting year to begin in any month. Fiscal years are numbered according to the year in which they end. For example, a fiscal year ending in February of 1992 is Fiscal 1992, even though most of the year takes place in 1991.
A long term asset of a business such as a machine or building that will not usually be traded.
Prepared at the end of a period using budgeted revenues and costs based on actual output in the budget period. It is a hybrid of the static budget and actual results. A flexible budget is a tool that allows management to compute more variances.
A chronological list of transactions recorded in a specific format.
Generally Accepted Accounting Principles (GAAP)
A widely accepted collection of rules and procedures for reporting financial information. These were designed to protect clients from fraud and ensure they get the most accurate information
A bill issued to a customer.
Job Order Costing
The costs accumulated by specific jobs, contracts, or orders.
Expresses management's operating and financial plans for a specified period, and it includes a set of budgeted financial statements.
Net Profit = Gross Profits - Costs
Expenditures arising out of current business activities. The costs incurred to do business such as salaries, electricity, rental. Also may be called "overhead."
Decisions made to determine how to use limited resources
The cost of operating on a property. Insurance, taxes, and rent or mortgage payments are examples of these costs.
A small store of cash used for minor business expenses
To reflect a change. Used in financial statements to show the impact of a possible financial decision.
Securities and Exchange Commission
A federal agency that oversee the exchange of securities to protect investors.
Analyzing "what if" scenarios with a budget to see how sensitive outcomes are to changes.
The concept that businesses should function under a certain moral law. For example, when an individual hires a business to do a job, it is assumed they will complete it, not just take the money and run.
A ledger used to record common, reoccurring transactions.
A budget based on the level of output planned at the start of a budget period. No adjustment is made during the budgeted period.
Setting budgeting targets high to provide incentive to work harder, but it can have the opposite effect if targets are perceived as unattainable.
A bookkeeping short-cut that uses the letter T to record financial transactions.
Capital Bank Checking
Debits T Credits
The act of imposing a tax, or the amount of a tax charged.
A variance that decreases operating income relative to the budgeted amount. Whether an unfavorable variance is good or bad depends on what caused the variance.
The difference between what was planned and what actually happened in budgeting.
The practice and body of knowledge concerned with recording transactions, keeping financial records, performing audits, advising on taxation issues, and reporting financial information.
Capital gain or loss
The difference between the sales price and the purchase price of an asset; this could be either positive or negative.
Conforming to a rule, policy, standard, or law.
Requirements imposed to ensure that a company is acting responsibly and ethically.
Helps advise managers on the best course of action based on cost efficiency and capability.
The automatic or semi-automatic computational process of discovering patterns in large data sets.
Dodd-Frank Reform Act
Legislation which brought the most significant changes to financial regulation since the regulatory reform during the Great Depression.
Relates more to whether a company has a code of conduct or a code of values that describe the way in which the company and its employees are expected to act and behave.
Federal Trade Commission
An agency of the United States government that focuses on promoting a competitive market and protecting consumers from false advertising and unfair business practices.
Documentation that provides information about the performance and changes in the fiscal position of an enterprise.
Gramm-Leach Bliley Act
This legislation requires financial-service providers to explain their information-sharing practices and to safeguard sensitive data.
Traditional risk-financing tool used to transfer the financial hazard of risk.
The possibility that an event will occur and positively affect the achievement of objectives.
Has the same force of law as a traditional piece of legislation; they are rules that an authoritative body, such as a federal agency, created. Failure to comply will result in facing penalties or other consequences.
A probability or threat of damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.
Policies, procedures, and practices involved in the identification, analysis, assessment, and control of any negative occurrence in an effort to mitigate or eliminate such hazards.
Risk Management Policy
An organization's written statement that sets out its approach to an appetite for any hazard or negative occurrence.
Legislation passed in 2002 by Congress that requires significantly tighter responsibilities for corporations when reporting financial statements, and it also requires a company's CEO or CFO to certify all external financial reports
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