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CAPITAL
refers to resources like land, buildings, machinery, tools, and materials used in production.
FIXED CAPITAL
Assets used repeatedly in production over a long time
(e.g., land, buildings, machinery, tools, and equipment) .
NATURAL CAPITAL
Land and Natural resources
ARTIFICIAL CAPITAL
Produced assets like buildings, machinery, tools, and materials.
WORKING CAPITAL
Funds required for daily operations.
PAID-IN CAPITAL
refers to the money paid for the stock sold.
EQUITY CAPITAL
total assets of an enterprise minus debts.
INDIVIDUAL SAVINGS
Money saved by people, either directly (in banks) or indirectly (through insurance or investments), from their income.
BUSINESS SAVINGS
Profits of businesses reinvested in equipment, machinery, and other assets for production.
GOVERNMENT SAVINGS
Surplus from collected taxes used for public projects like roads and schools.
CAPITAL POOL
it fuels the economy.
MONEY MARKET
refers to a financial market segment where short-term borrowing, lending, buying, and selling of financial instruments occur.
SHORT-TERM LOANS
Typically range from 30 days to 2 years.
It is usually used to cover temporary needs of a business-like purchasing materials or supplies, paying for operational expenses like salaries.
INTERMEDIATE TERM LOANS
Extend up 2 to 5 years.
Usually used for projects that take longer to generate returns like upgrading equipment or expanding business facilities.
LONG-TERM LOANS
It usually lasts for more than 5 years.
Used for large projects or investments that require significant capital.
COMMERCIAL BANKS
Served the current credit needs of business enterprises.
TRADE CREDITS
mainstay of intermediate and short-term financing, particularly for the small enterprise.
It covers not only commodities and supplies, but also machinery, fixtures, equipment, and other items of longer-term financing.
CREDIT INSTRUMENTS
These are the legal forms through which loans are made.
PROMISSORY NOTES
A written promise by the borrower to pay a specific amount of money at a designated time.
BILLS OF EXCHANGE
A written order directing a party to pay a specific amount to another party at a future date.
CREDIT CARDS
A revolving credit instrument allowing the holder to borrow money up to a certain limit, to be paid back over time.
COMMERCIAL PAPERS
It is a short-term, unsecured debt instrument issued by large corporations or financial institutions to raise funds for immediate financial needs, such as payroll, inventory, or short-term liabilities.
VENTURE CAPITAL
It is money invested in businesses in exchange for ownership (equity).
FINANCING THE NON CORPORATE ENTERPRISE
In this case it shows how single proprietorships and partnerships are typically financed. Initially, the capital comes from the owners themselves and potentially from loans or investments made by their friends.
This method—funding a business through personal and property contributions by those directly involved—has been one of the oldest forms of business promotion, and it continues to be an important method of financing even today.
CORPORATE CAPITALIZATION
The key factors or chief factors in this decision are the nature and size of the business.
COMMON STOCK
carries no special rights or privileges.
bear the full risk of the business, and are the legal owners, entitled to the net assets.
They typically control the business through the voting power of their stock.
PREFERRED STOCK
a type of capital stock designed to attract investors by offering specific benefits, such as priority in receiving dividends and assets, convertibility to common stock, or investment security through a sinking fund.
However, it may have limited or no voting power, as its privileges reduce the risks common shareholders face.
BONDS
are promises to repay loans.
INVESTMENT
is a long-term responsibility of management to yield a large amount of profit or return.
BUDGETING
is a function to plan that profit or return picture.
CONTROL THROUGH THE BUDGET
Budget is a means toward an end and is not an end within itself. It establishes a goal.
Recording of actual results against estimates of the budget.
COORDINATION THROUGH THE BUDGET
Budgets should be constructive aids to all departments, within an organization in achieving their common goals.
VARIABLE BUDGET
Constructed in anticipation of variations in sales. It provides in advance for orderly change in the volume of production and in expenditures.
STEP BUDGET
A series of budgets set up at different levels of volume of production or sales.
VARIABLE RATE OF COST
Provides an estimate of the variable rate of cost per unit of production or per dollar shipments of sales.
STATIC BUDGET (FIXED BUDGET)
This depends on ability to predict income, sales, or shipments with at least a reasonable degree of accuracy.
ZERO-BASE BUDGETING
Requires each budget unit to make a fresh start every year. from zero outlay level to how much will be needed next year to conduct operations.
Its prominence is elevated when President Carter prescribes it for the Federal budget.
BUDGET DIRECTOR
Often the controller or assistant controller.
Role: They act as a coordinator between divisions or departments in budget preparation.
BUDGET COMMITTEE
Usually, the heads of divisions together with the staff representatives.
Role: Receiving and approving forecasts, departmental or division budgets, periodic reports, and request special studies of deviation from the budget and consider revision of budget to meet changed business conditions.
BUDGET OFFICER
Role: Ensures that the department estimates are provided with supporting data for effective consideration of the committee, responsible for the presentation of the budgets.
transmitting back to the departments the recommendations of acceptance or revision, organization of periodic operation reports, and preparing special reports recommend revision to correct difficulties.
DEPARTMENTAL BUDGET PREPARATION
This adheres to the principle of participation as means towards cooperation.
Head of the department may act as a chairman of the department committee but, in a large department, he/she should assign detailed gathering of budget information to different teams.
An organization within the department will lead to better budget preparation and will prove especially useful in budget control.
ADEQUATE COST INFORMATION
essential for budgeting and constitute the foundation for the conversion of forecast and business policy into production.
PRODUCTION BUDGET
Outlines the schedule of product units to be manufactured.
MATERIALS BUDGET
Specifies the direct material needed to produce the number of units scheduled.
PLANT AND EQUIPMENT BUDGET
Sets forth the requirements of space and machinery.
MAINTENANCE BUDGET
Covers maintenance of facilities and equipment.
MANUFACTURING EXPENSE BUDGET
Includes the overhead or burden charges for the period.
LABOR BUDGET
Specifying the productive personnel needed to meet the production schedule.
FINANCIAL BUDGET
Presents a summary of anticipated receipts and disbursements for the budget period.
ABSOLUTE NECESSITIES
Essential expenses like monthly requirements of materials for production, payroll, etc.
LIMITATION OF AVAILABLE CASH
Ensuring that expenses do not exceed available cash.
