CHAPTER 14: Basic Financial Planning Flashcards
Profit Planning
a series of prescribed steps to be take to ensure that a profit will be made
Benchmarking
setting up standards (for reference) and then measuring performance against them
Accounting Records
records of a firm’s financial position that reflect any changes in that position
Financial Structure
describes the relative proportions of a firm’s assets, liabilities, and owner’s equity
Balance Sheet
a statement of a firm’s assets, liabilities, and owner’s equity at a given time
Assets
things a business owns
Accounts Receiviable
current assets resulting from selling a product on credit
Liabilities
the financial obligations of a business
Accounts Payable
obligations to pay, resulting from purchasing goods or services
Owner’s Equity
the owner’s share of (or net worth in) the business, after liabilities are subtracted from assets
Income Statement (profit & loss statement)
periodically shows revenues, expenses, and profits from a firm’s operations.
Revenue (sales income)
the value received by a firm in return for a good or service
Expenses
costs of labor, goods, and services
Cost of Goods Sold
the total cost in terms of raw materials, labor, and overhead of the business that can be allocated to production
Profit (income)
difference between revenue earned and expenses incurred
