business finalz 2

Financial Management

is the process of planning, organizing, directing, and controlling financial activities to achieve business goals. 

Guthman and Dougal

“Financial management is the activity concerned with planning, raising, controlling, and administering of funds used in the business.”

J.F Brandley

“Financial management is that area of business management devoted to a judicious use of capital and a careful selection of the source of capital in order to enable a spending unit to move in the direction of reaching the goals. ”

Massie

“Financial management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operations. ”

Financial Forecasting

 is the process of estimating future financial outcomes based on historical data, market trends, and current conditions.

Budgeting

is the process of preparing a financial plan that outlines expected income and expenses over a specific period. 

Risk Management

 involves identifying, assessing, and minimizing potential financial risks.

Resource Acquisition

refers to obtaining the financial resources needed for business operations and expansion.

Public Finance

it refers to the management of government income, expenditures, and debts.

Financial System

is a network of institutions, markets, instruments, and regulations that facilitates the flow of money in an economy.

Commercial Bank

Banks that accept deposits and provide loans to the public.

Rural Bank

Banks that serve rural communities and support agriculture and small businesses.

Credit Cooperative

Organizations owned by members that provide savings and lending services.

Statement of Owner’s Equity

is a financial document that tracks how an owner's stake in a business changes over a specific accounting period. It bridges the income statement and the balance sheet by detailing the owner’s initial investment, additional contributions, net income, and personal withdrawals. 

Owner’s Equity

often called net assets, is the owner’s claim to company assets after all the liabilities have been paid off.

Systematic Risk, Unsystematic Risk

2 types of Categories of Investment risks

Market Risk, Credit Risk, Liquidity Risk, Inflation Risk, Interest Rate Risk, Currency and Exchange Rate Risk, Business Risk

7 types of investment risks

Tax

is a mandatory contribution collected by the government from individuals, businesses, and other entities to finance public services and government operations.

National Internal Revenue Code

is one of the major laws governing taxation in the Philippines. It provides the rules and regulations concerning national internal revenue taxes, including income tax, business taxes, estate tax, donor’s tax, and other taxes administered by the Bureau of Internal Revenue.

Income Taxation

refers to the tax imposed on taxable income earned by individuals and businesses, subject to applicable laws, deductions, exemptions, and tax rates.

National taxes

is based on the National Internal Revenue Code of 1997 or the Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997, as amended. 

Value Added Tax

a business tax imposed and collected from the seller in the course of trade or business on every sale of properties (real or personal), lease of goods or properties (real or personal), or vendors of services.

Local Taxes

the local government taxation in the Philippines are based on Republic Act 7160, or otherwise known as the Local Government Code of 1991, as amended. These taxes, fees, or charges are imposed by the local government units, such as provinces, cities, municipalities, and barangays.

Gross Income

It is the income before applicable deductions.

BIR Form 2316

is an official document issued by an employer to an employee at the end of the calendar year, or upon the employee's separation from the company.

Tax Compliance

means following the tax laws and fulfilling the tax obligations required of an individual or business.

Tax Avoidance

generally refers to arranging one's financial affairs in a legal manner to minimize tax liability by taking advantage of deductions, exemptions, credits, or other tax provisions allowed by law.

Tax Evasion

is the illegal act of deliberately avoiding or reducing tax obligations through fraud, concealment, falsification, or other unlawful means.