Financial and Risk Management Flashcards Preview

ARE 5.0 - Business Operation > Financial and Risk Management > Flashcards

Flashcards in Financial and Risk Management Deck (120)
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1

What are the types of Financial Management?

Basic Accounting (General Ledger)
Project Cost Accounting

2

Describe Basic Accounting.

Applicable to all business
Keeps track of money flowing
Provide overall financial status of the firm
Fundamental for decisions with profitability and survival

3

Describe Project Cost Accounting.

Tracks revenue, expenses and profit by projects
Evaluate time spent and how it affects the health of the company
Helps to decide how to allocate resources, manage projects and develop accurate proposals

4

What is Accounts Payable?

Amount owed not yet paid (goods/sevices)

5

What is Accounts Receivable?

Money owed by others (invoices/services)

6

What are Tangible Assets?

Cash, inventory, machinery that can be measured in monetary terms

7

What are Intangible Assets?

Patents, Copyrights, Trademarks that can be measured in monetary terms

8

What are Current Assets?

Resources that can be converted into cash in one year

9

What are Fixed Assets?

Resources that are retained for a long period of time

10

What is a Chart of Accounts?

List of various accounts and its number to keep track of money

11

What is included in the Direct Personnel Expenses?

Employee salaries plus mandatory and discretionary expenses

12

List Mandatory Expenses

Taxes and Health Insurance

13

List Discretionary Expenses

Meals, Party, etc

14

What is Direct Labor?

All labor that is direct chargeable to a project (technical staff, principal and support staff)

15

What is Indirect Labor?

All labor not charged to a specific project (administrative, office and marketing personnel)

16

What is Discretionary Distribution?

Voluntary distribution of profits to owners and non-owners

17

What is included in the Discretionary Distribution/

Performance bonuses
Profit sharing
Incentive compensation

18

What is Liability?

Claims against the business

19

What is Gross Revenue?

All revenue generated during a stated period of time

20

What is Net Revenue?

Money that remains after all expenses are paid (revenue minus expenses)

21

What is Overhead?

Fixed expenses (rent, leases, electricity, telephone services, etc)

22

What can be included in Other Assets?

Securities and Copyrights

23

What are the accounting methods?

Cash Accounting
Accrual Accounting

24

Describe Cash Accounting

Revenue and expenses are processed when received/paid the money

25

Main advantages of Cash Accounting?

Better to track actual cash flow
Very simple and usually used by a single-person business
Grouped in individual accounts for auditing purpose, review, tax preparation, management and analysis

26

Describe Accrual Accounting

Revenue and expenses are processed at the time you receive/send an invoice (money not received yet)

27

Main advantages of Accrual Accounting?

Gives a better picture of a business long-term financial status
Grouped in individual accounts for auditing purpose, review, tax preparation, management and analysis
Uses double-entry bookkeeping and posted to a ledger where transactions are grouped into individual accounts

28

What is Double-entry Bookkeeping?

All transactions chronologically listed in a journal

29

What is the typically accounting method used by Architectural firms?

Modified Accrual Basis

30

Describe Modified Accrual Basis method

Firm records fee revenues, expenses billed to the client, and invoices from outside consultants