accounting and finance business quiz

accounting

a system for recognizing, organizing, analyzing, and reporting information about the financial transactions that affect an organziation

financial accounting

the branch of accounting that prepares financial statements for use by owners, creditors, suppliers, and other external stakeholders

managerial accounting

the branch of accounting that provides reports and analysis to managers to help them make informed business decisions

generally accepted accounting principles (gaap)

a set of accounting standards that is used in the preparation of financial statements

balance sheet

A financial statement that reports assets, liabilities, and owner's equity

accounting equation

Assets = Liabilities + Owner's Equity

assets

money and other valuables belonging to an individual or business

liabilities

Money or debts owed to others.

owners equity

the claims a firm's owners have against their company's assets

income statement

the financial statement that reports the revenues, expenses, and net income

revenue

increases in a firm's assets that result from the sale of goods, providing of services, or other activities to earn income

expenses

resources that are used up as the result of business operations

net income

the difference between the revenue a firm earns and the expenses it incurs

statement of cash flows

the financial statement that identifies a firm's sources and uses of cash

horizontal analysis

analysis of financial statements that compares account values reported on these statements over two or more years to identify changes and trends

budgeting

planning through which businesses decide how to allocate available money to best accomplish company goals

operating budget

budgets that communicate an organization's sales and production goals and the resources needed to achieve these goals

financial budget

budgets that focus on the firm's financial goals and identify the resources needed to achieve these goals

master budget

a presentation that represents the firm's overall plan of action for a specified time period

cost

the value of what is given in exchange for something

out of pocket cost

a cost that involves the payment of money or other resources

implicit cost

a non-monetary opportunity cost

fixed costs

costs that do not vary with production or sales level

variable costs

costs that vary directly with the level of production

direct cost

costs that are incurred directly as the result of some specific cost object

indirect cost

costs that are a result of a firm's general operations and are not directly tied to any specific cost object

financial capital

the funds a firm uses to acquire its assets and finance its operations

finance

the area of business that deals with finding the best sources and uses of financial capital