DECA Finance

fun

Accountant

an individual who has had specialized training in accounting procedures

Accounting

The process of keeping and interpreting financial records

Accounting department

a special department responsible for the firm's accounting needs

Accounting system

the methods and procedures used in handling a business's financial information

Accounts receivable

Monies owed to a business by its customers

Accrual accounting method

A method of accounting that records transactions at the time they occur even if no money changes hand at the time

Assets

anything of value that a business or individual owns

Balance sheet

a financial statement that captures the financial condition of the business at that particular moment

Bookkeeping

The step in the accounting process that actually records the business's financial information

Cash

currency and coins

Cash accounting method

an accounting method in which income and expenditures are recorded at the time the money changes hands

Cost of goods

the amount of money a business pays for the products it sells of for the raw materials from which it produces goods to sell

Credit

the arrangement by which businesses or individuals can purchase now and pay later

Creditors

Individuals or businesses to whom a business owes money or from whom it wants it to borrow money

Current liabilities

debts that must be paid within a year

Debts

amounts of money business or individuals owe to others

Disbursement journal

An accounting record for recording daily expenditures

Economic forecast

a prediction of what may happen in the nations economy

Expenses

The monies that a business spends

Financial statement

A summary of accounting information

Fixed assets

items of value a business owns that are not expected to change (buildings)

Income

money received by a business or an individual from outside sources for supplying goods and services to customers

Income statement

A financial summary that shows how much money the business has made or has lost; also called the profit-and-loss statement

Investors

those who invest their funds in a business, may be owners or stockholders

Journal

a special book or computer program in which a business's transactions are recorded in the order in which they occur

Ledger

the accounting record for a specific department or area of the business

Liabilities

debts that the business owes

Long-term liabilities

debts that will take longer than a year to pay (mortgage)

Managers

individuals whose jobs involve carrying out management functions

Net worth

the total value of the business

Operating expenses

all of the expenses involved in running a business

Owner's equity

the amount an owner has invested in the business plus or minus profits and losses

Posting

transferring accounting information from a daily journal to the appropriate ledger

Product mix

the particular assortment of goods and services that a business offers in order to meet the needs of its markets and its company goals

Profit

monetary reward a business owner receives for taking the risk of investing in business; income left after all expenses are paid

Profit-and-loss statement

income statement

Return on investment

Income received from an investment in a business

Sales journal

an accounting record used to record the businesses daily receipts

Sales revenues

money that comes into the business from the sale of goods and services

Sales trends

the direction in which sales are moving, i.e. increasing or decreasing

Stockholders

owners of stock, also known as shareholders

Transaction

A business activity such as a sale, a purchase, or a return

Benchmark

something that provides a basis for comparison or evaluation

Budget

An estimate of income and expense for a specific period of time

Chamber of commerce

A local organization of businesses and companies that make known to the government the recommendations of the business community on issues and problems affecting the local economy

Expense

the money that a business spends

Fiscal Year

the 12-month period chosen by a business as its operating year that may or may not coincide with the calendar year

Income

the money received by resources owners and by producers for supplying goods and services to customers

Interrelated

having an effect on or depending upon one another

Manufacturer

a type of product that changes the shapes or forms of materials so that they will be useful to consumers

Master budget

the overall budget of a company, made up of information from specialized budgets that are generated by individual departments

Retailer

a business that buys consumer goods or services and sells them to the ultimate consumer

Rolling budget

also called a continuous budget, this replaces each passing month with a new month added to the end of the budget, so that there is always a year-long budget in place

Sales forecast

a prediction of future sales over a specific period of time

Service business

a type of business that performs intangible activities that satisfy the wants of consumers or industrial users

Specialized budget

a budget that reflects a particular department or activity of a company; interrelated, often relying on one another for estimated of future activity

Trade association

a group of persons in the same industry or geographic area who from a society to serve their common interests

U.S. Department of Commerce

a federal agency that works in partnership with businesses, universities, communities, and workers to promote job creation and economic growth

U.S. Small Business Administration

A federal agency whose mission is to "maintain and strengthen the nation's economy by aiding, counseling, assisting and protecting the interests of small businesses and by helping families and businesses recover from national disasters

Variance

the difference between a budgeted amount and an actual amount

Zero-based budgeting

a method of budgeting that requires a manager to demonstrate the need for every expense instead of relying on figures from a previous period; in effect, each new budget begins at zero

Accounts payable

all monies owed by the business to others

Acquisition of funds

Finance activity involving making decisions about a financing

Administration of assets

finance activity involving making decisions about a firm's investment

Capital budgeting

a process in which a firm's financial managers determine which projects should invest in

Capital investment decisions

decisions that determine which projects a business will invest in; how the investments will be financed and whether or not to pay dividends to shareholders

Capital structure

a firm's mix of financing, usually some combination of debt and equity

Cash conversion cycle

ratio that refers to the number of days between a company's paying for raw materials and receiving cash from selling the products made from those raw materials

Dividend

a sum of money paid to an investor or stockholder as earnings on an investment

Equity

Assets minus liabilities; also known as stockholders' equity, book value, and net worth

Finance

in business, the function that involves all money and money management matters

Financing

Funding a business activity or project through debt, equity, or venture capital

Return on capital

A measure of how well a business generates cash flow in relation to the capital it has already invested into itself

Venture capital

invested money used for new business opportunities

Working capital management

Management of a firm's current balance of assets and liabilities; involves accounts payable and receivable, inventory, and cash

Break-even point

The level of sales at which revenues equal total costs

Fixed Costs

Business costs that are not affected by changes in sales volume

Sales Revenue

Money that comes in to a business from the sale of goods and services; also called income from sales

Selling Price

the amount a seller chargers the purchaser for a good or service

Semivariable Costs

Business costs that vary to some extent in response to sales

Total Costs

all of a business's costs, both fixed and variable

Variable-Cost Margin

The amount of variable costs that apply to one unit; also called fixed-cost contribution

Variable Costs

Business costs that change according to changes in sales volume

Beginning cash balance

The amount of money a business has available at the beginning of each month

Benefits

advantages or payments employees receive in addition to their wages (sick time, holiday pay, health insurance)

Business license

A document that grants permission to operate a business

Cash flow

the movement of funds into and out of a business; determines the amount of cash the business has to work with at any given time

Cash flow statement

a financial summary with estimates as to when, where, and how much money will flow into and out of a business

Cash payments

the money that a business spends (business expenses)

Cash receipts

the money that a business collects (business income)

Cash shortage

the situation that exists when more money flows out of a business than flows in

Cash surplus

the situation that exists when more money flows into a business than flows out

Contracts/agreements

legal agreements between two or more businesses stating that one party is to do something in return for something provided by the other party

Cost of goods to be sold

the amount of money a business pays for the product it will sell

Ending cash balance

the amount of cash a business has left at the end of the month

Fixed expenses

Business costs that are not affected by changes in sales volume

Industry trend

The direction in which a particular industry is moving, sales in particular may be increasing or decreasing

Interest

Money payments for the use of borrowed money

Loan

Money lent to individuals or businesses in exchange for the promise of repayment plus interest

Marketing research

The systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services