MGMT 1 Final Study Guide

Accounting

Often called the language of business, helps stakeholders make better business decisions by providing financial information.

Management Accountants

Provide information and analysis to decision makers inside the organization to help run it.

Financial Accountants

Furnish information to stakeholders inside and outside the organization to help assess financial performance.

Management Accounting

Prepares tailored reports for management to make decisions about the business.

Financial Accounting

Prepares financial statements accessible to the public and typically on a 12 month basis.

GAAP

Generally Accepted Accounting Principles issued by the Financial Accounting Standards Board.

Fiscal Year

A year used for accounting purposes that may vary to coincide with peak selling periods.

Securities and Exchange Commission (SEC)

A federal agency that regulates stock trades and ensures companies report their financial positions truthfully.

Income Statement

Shows revenues and expenses, including cost of goods sold and net income.

Assets

Things a business owns.

Liabilities

Things a business owes.

Equity

The investment made by the owners in a business.

Unsecured Credit

A source of money without guarantee of payment.

Secured Credit

A type of credit backed by collateral.

Breakeven Analysis

Determines the point at which total sales revenue equals total expenses.

Debt Financing

Borrowing money through loans or bonds.

Equity Financing

Selling ownership stakes in a company.

Ratio Analysis

A technique for evaluating a company’s financial performance using ratios.

Profitability Ratios

Indicate how much profit is made relative to investment or sales.

Liquidity Ratios

Measure how well a company can meet short-term obligations.

Debt Ratios

Examine how much debt is used to finance a company's operations.

Efficiency Ratios

Evaluate how well a company manages its assets.

Financial Manager's Main Goal

To maximize the firm's value to its owners.

Sole Proprietorship

A business owned completely by one individual.

Partnership

A business owned jointly by two or more people.

Corporation

A legal entity separate from its owners, capable of entering contracts and being taxed.

Limited Liability Company (LLC)

Combines the benefits of a corporation with the tax efficiencies of a partnership.

Merger

When two companies combine to form a new entity.

Acquisition

The purchase of one company by another.

Operations Management (OM)

Activities involved in transforming product ideas into finished products.

Product Planning

Determining how goods will be produced and where.

Production Control

Scheduling and monitoring production activities to meet demand.

Quality Control

Ensuring goods and services meet specifications.

Just-in-Time Production

Arranging for materials to arrive just as needed in the production process.

Statistical Process Control

Monitors production quality by testing sample outputs.

Leadership Styles

Different approaches to leading and motivating teams.

Autocratic Leadership

Decision-making style where managers make decisions without consulting subordinates.

Democratic Leadership

Decision-making style where input from subordinates is sought.

Free-rein Leadership

A hands-off management approach giving employees control.

Centralized Decision Making

Concentration of decision-making authority at the top levels.

Decentralized Decision Making

Spreads decision-making authority throughout the organization.