Business up to 19

Budget

A financial plan that sets forth management's expectations, and, on the basis of those expectations, allocates the use of specific resources throughout the firm.

Capital Budget

A budget that highlights a firm's spending plans for major asset purchases that often require large sums of money.

Capital Expenditures

Major investments in either tangible long-term assets such as land, buildings, and equipment or intangible assets such as patents, trademarks, and copyrights.

Cash Budget

A budget that estimates cash inflows and outflows during a particular period like a month or a quarter.

Cash Flows Forecast

Forecast that predicts the cash inflows and outflows in future periods, usually months or quarters.

Commercial Finance Companies

Organizations that make short-term loans to borrowers who offer tangible assets as collateral.

Commercial Paper

Unsecured promissory notes of $100,000 and up that mature (come due) in 270 days or less.

Cost of Capital

The rate of return a company must earn in order to meet the demands of its lenders and expectations of its equity holders.

Debt Financing

Funds raised through various forms of borrowing that must be repaid.

Equity Financing

Money raised from within the firm, from operations or through the sale of ownership in the firm (stock or venture capital).

Factoring

The process of selling accounts receivable for cash.

Finance

The function in a business that acquires funds for the firm and manages those funds within the firm.

Financial Control

A process in which a firm periodically compares its actual revenues, costs, and expenses with its budget.

Financial Management

The job of managing a firm's resources so it can meet its goals and objectives.

Indenture Terms

The terms of agreement in a bond issue.

Leverage

Raising needed funds through borrowing to increase a firm's rate of return.

Line of Credit

A given amount of unsecured short-term funds a bank will lend to a business, provided the funds are readily available.

Long-Term Financing

Funds needed for more than a year (usually 2 to 10 years).

Long-Term Forecast

Forecast that predicts revenues, costs, and expenses for a period longer than 1 year, and sometimes as far as 5 or 10 years into the future.

Operating (or master) Budget

The budget that ties together the firm's other budgets and summarizes its proposed financial activities.

Promissory Note

A written contract with a promise to pay a supplier a specific sum of money at a definite time.

Revolving Credit Agreement

A line of credit that is guaranteed but usually comes with a fee.

Risk/Return Trade-Off

The principle that the greater the risk a lender takes in making a loan, the higher the interest rate required.

Secured Bond

A bond issued with some form of collateral.

Secured Loan

A loan backed by collateral (something valuable, such as property).

Short-Term Forecast

Forecast that predicts revenues, costs, and expenses for a period of one year or less.

Term-Loan Agreement

A promissory note that requires the borrower to repay the loan in specified installments.

Trade Credit

The practice of buying goods and services now and paying for them later.

Unsecured Bond

A bond backed only by the reputation of the issuer; also called a debenture bond.

Unsecured Loan

A loan that doesn't require any collateral.

Venture Capital

Money that is invested in new or emerging companies that are perceived as having great profit potential.

Financial Managers

Managers who examine financial data prepared by accountants and recommend strategies for improving the financial performance of the firm.

Short-Term Financing

Funds needed for a year or less

Accounting

The recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested parties the information they need to make good decisions.

Accounting Cycle

A six-step procedure that results in the preparation and analysis of the major financial statements.

Accounts Payable

Current liabilities involving money owed to others for merchandise or services purchased on credit but not yet paid for.

Annual Report

A yearly statement of the financial condition, progress, and expectations of an organization.

Assets

Economic resources (things of value) owned by a firm.

Auditing

The job of reviewing and evaluating the information used to prepare a company's financial statements.

Balance Sheet

Financial statement that reports a firm's financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners' equity.

Bonds Payable

Long-term liabilities that represent money lent to the firm that must be paid back

Bookkeeping

The recording of business transactions.

Cash Flow

The difference between cash coming in and cash going out of a business.

Certified Internal Auditor (CIA)

An accountant who has a bachelor's degree and two years of experience in internal auditing, and who has passed an exam administered by the Institute of Internal Auditors.

Certified Management Accountant (CMA)

A professional accountant who has met certain educational and experience requirements, passed a qualifying exam in the field, and been certified by the Institute of Certified Management Accountants.

Certified Public Accountant (CPA)

An accountant who passes a series of examinations established by the American Institute of Certified Public Accountants (AICPA).

Cost of Goods Sold (Or Cost of Goods Manufactured)

A measure of the cost of merchandise sold or cost of raw materials and supplies used for producing items for resale.

Current Assets

Items that can or will be converted into cash within one year.

Depreciation

The systematic write-off of the cost of a tangible asset over its estimated useful life.

Double-Entry Bookkeeping

The practice of writing every business transaction in two places.

Financial Accounting

Accounting information and analyses prepared for people outside the organization.

Financial Statement

A summary of all the transactions that have occurred over a particular period.

Fixed Assets

Assets that are relatively permanent, such as land, buildings, and equipment.

Fundamental Accounting Equation

Assets = Liabilities + Owners′ equity; this is the basis for the balance sheet.

Government and Not-for-Profit Accounting

Accounting system for organizations whose purpose is not generating a profit but serving ratepayers, taxpayers, and others according to a duly approved budget.

Gross Profit (Or Gross Margin)

How much a firm earned by buying (or making) and selling merchandise.

Income Statement

The financial statement that shows a firm's profit after costs, expenses, and taxes; it summarizes all of the resources that have come into the firm (revenue), all the resources that have left the firm, expenses, and the resulting net income or net loss.

Independent Audit

An evaluation and unbiased opinion about the accuracy of a company's financial statements.

Intangible Assets

Long-term assets (e.g., patents, trademarks, copyrights) that have no real physical form but do have value.

Journal

The record book or computer program where accounting data are first entered.

Ledger

A specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place.

Liabilities

What the business owes to others (debts).

Liquidity

The ease with which an asset can be converted into cash.

Managerial Accounting

Accounting used to provide information and analyses to managers within the organization to assist them in decision making.

Net Income or Net Loss

Revenue left over after all costs and expenses, including taxes, are paid.

Notes Payable

Short-term or long-term liabilities that a business promises to repay by a certain date.

Operating Expenses

Costs involved in operating a business, such as rent, utilities, and salaries.

Owner's Equity

The amount of the business that belongs to the owners minus any liabilities owed by the business.

Private Accountant

An accountant who works for a single firm, government agency, or nonprofit organization.

Public Accountant

An accountant who provides accounting services to individuals or businesses on a fee basis.

Ratio Analysis

The assessment of a firm's financial condition using calculations and interpretations of financial ratios developed from the firm's financial statements.

Retained Earnings

The accumulated earnings from a firm's profitable operations that were reinvested in the business and not paid out to stockholders in dividends.

Statement of Cash Flows

Financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing.

Tax Accountant

An accountant trained in tax law and responsible for preparing tax returns or developing tax strategies.

Trial Balance

A summary of all the financial data in the account ledgers that ensures the figures are correct and balanced.

Promotion Mix

The combination of promotional tools an organization uses

Integrated marketing communication (IMC)

A technique that combines all the promotional tools into one comprehensive, unified promotional strategy

advertising

Paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the advertising message

product placement

putting products into TV shows and movies where they will be seen

infomercial

a full-length TV program devoted exclusively to promoting goods or services

interactive promotion

promotion process that allows marketers to go beyond a monologue, where sellers try to persuade buyers to buy things, to a dialogue in which buyers and sellers work together to create mutually beneficial exchange relationships

personal selling

the face-to-face presentation and promotion of goods and services

prospecting

researching potential buyers and choosing those most likely to buy

qualifying

in the selling process, making sure that people have a need for the product, the authority to buy, and the willingness to listen to a sales message

prospect

A person with the means to buy a product,t he authority to buy, and the willingness to listen to a sales message

trial close

a step in the selling process that consists of a question or statement that moves the selling process toward the actual close

public relations (PR)

the management function that evaluates public attitudes, changes policies and procedures in response to the public's requests, and executes a program of action and information to earn public understanding and acceptance

publicity

any information about an individual, product, or organization that's distributed to the public through the media and that's not paid for or controlled by the seller

sales promotion

the promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities

sampling

a promotional tool in which a company lets consumers have a small sample of a product for no charge

word-of-mouth promotion

a promotional tool that involves people telling other people about products they've purchased

viral marketing

the term now used to describe everything from paying customers to say positive things on the internet to setting up multilevel selling schemes whereby consumers get commissions or directing friends to specific web sites

blog

an online diary (web log) that looks like a web page but is easier to create and update by posting text, photos, or links to other sites

podcasting

a means of distributing audio and video programs via the internet that lets users subscribe to a number of files, also known as feeds, and then hear or view the material at the time they choose

push strategy

promotional strategy in which the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise

pull strategy

promotional strategy in which heavy advertising and sales promotion efforts are directed towards consumers so that they'll request the products from retailers

pick economy

customers who pick out their products from online outlets or who do online comparison shopping

propaganda

non-personal communication that does not have an identified sponsor

lead generation

the process of prospecting and qualifying

event marketing

sponsoring events such as rock concerts or being at various events to promote your product