BUSN Exam #3

xicufaza's version from 2015-11-20 01:37


Question Answer
Number of hours entrepreneurs work on average60-80 hours
small business administration-defines companies and employersSBA defines small businesses as companies with up to 500 employees, including self-employed
Entrepreneurship-strong internal locus of controldeep-seated sense that the individual is personally responsible for what happens in his or her life
what is the small business administrationagency of the federal government designed to maintain and strengthen the nation's economy by aiding, counseling, assisting, protecting the interests of small businesses
group providing counseling for small businessesSCORE, service corps of retired executives (volunteers)
accounting equationassets=liabilities+owner's equity
why necessary to have a formal business plancrucial for obtaining outside funding, focus on success
why stockholders want a firm's accounting informationshows financial performance, strong ROI, stockholder's equity
what liabilities are on the balance sheetclaims that outsiders have against a firm's assets, what a firm owes to its owners
potential funding source for entrepreneursalternative lenders- private firms that charge high interest rates, angel investors- individuals who invest and own a share, venture capital firms- invest and own a share
characteristics of successful entrepreneursvision, energy, tolerance of uncertainty, self-reliance, confidence, and tolerance of failure
accounting master-budgeta presentation of an organization's operational and financial budgets that represents the firm's overall plan of action for a specified time period
how cost is definedaccountants define cost as the value of what is given up in exchange for something else
FASB Financial Accounting Standards Boardthe private board that establishes the generally accepted accounting principles used in practice of financial accounting
GAAP Generally Accepted Accounting Principlesa set of accounting standards that is used in the preparation of financial statements
Liabilities-how firms decide what is a liabilitycurrent liabilities-debts that come due within a year, long-term liabilities-debts that are due until more than a year
what a highly leveraged company ishighly leveraged company relies on debt, the higher the debt-to-asset ratio, the more heavily leveraged the firm is
money is worth more than money tomorrowtime-value concept
capital budgeting programyoung people invest because baby boomers have improved the market
fixed and variable costsfixed-interest on a loan, property insurance, rent, won't change will stay the same when the level of production changes within a range; variable- labor and materials, electric power, supplies, costs that vary directly within the level of production
point of ENRON video200 billion dollars lost by investors, social responsibility- the trust was lost
Why investors hold preferred stockgives preferred stockholders a better chance than common stockholders of recovering their investment if the company goes bankrupt
Concept of factoring and commercial paper/trade creditcommercial paper are IOU's that are backed by collateral, they carry a lower interest rate than commercial banks charge on short-term loans
Why investors favor value investinginvestors who favor value investing try to find stocks that are undervalued in the market and believe these stocks will rise and generate capital gain
Stock indexa statistic that tracks how the prices of a specific set of stocks have changed, indicator if things are going well
NASDAQall of the domestic and foreign common stocks traded on the NASDAQ exchange/return
Earnings per sharecomputed by dividing the net income available to common stockholders by the # of shares of common stock, it measures the net income per share of common stock outstanding
Profitability ratiosratios that measure the rate of return a firm is earning on various measures of investment like ROE, EPS, and debt-to-assets
Problem w/ people paying off credit/debt, more or less likely to pay it off?less likely to pay it off?
Budgeted income statements and balance sheetincome statement- a projection showing how a firm's budgeted sales and cost will affect expected net income; balance sheet- a projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets
Capital Budgetingthe process a firm uses to evaluate long-term investment proposals
Short-term financingtrade credit, spontaneous financing, factor, short-term bank loans, commercial paper
Dodd-Frank Actlaw enacted after 2009-2009 that strengthened government oversight of financial markets and placed limitations on risky financial strategies such as heavy reliance on leverage
Long-term financingdirect investment from owners, long-term debt, term loans, and corporate bonds
Capital gainsthe return on an asset that results when its market price rise above the price the investor paid for it
S&P 500a stock index based on prices of 500 major U.S. corporations in a variety of industries and market sectors
Federal Reserve Act of 1913established Federal Reserve system as the central bank of the U.S., looks over monetary policy, keeps money up, and sets the prime interest rate
Banking Act of 1933FDIC (Federal Deposit Insurance Corporation)
Securities Act of 1934SEC, wants public to have information to make wise investment decisions

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