Financial & Risk Management

Question 1

Basic accounting. Done by all businesses to keep track of money flowing into and out of the business. Needed for day-to-day operations, banking, taxes, and auditing.

Answer 1

General Ledger Accounting

Question 2

Accounting system that tracks revenue, expenses, and profit by individual projects

Answer 2

Project Cost accounting

Question 3

Accounts owed to the suppliers of goods or services (such as consultants, reproduction companies, or the utility company) that have not yet been paid

Answer 3

Accounts payable

Question 4

Money that others owe to the business through invoices for services

Answer 4

Accounts Revievable

Question 5

type of tangible or intangible resource that can be measured in monetary terms, including current assets, fixed assets, and other assets

Answer 5

Assets

Question 6

A list of the various accounts a business uses to keep track of money, along with corresponding account numbers used for data processing

Answer 6

Chart of accounts

Question 7

Resources of a business that a converted into cash within one year

Answer 7

Current assets

Question 8

All labor of technical staff, principals, and support staff that is directly chargeable to projects

Answer 8

direct labor

Question 9

the expense of employee salaries plus the cost of mandatory and discretionary expenses and benefits such as payroll taxes and health insurance

Answer 9

direct personnel expense

Question 10

voluntary distribution of profits to owners and nonowners, such as performance bonuses, profit sharing, and incentive compensation

Answer 10

discretionary distribution

Question 11

resources that the firm uses and retains for a long period of time, such as equipment and property

Answer 11

fixed assets

Question 12

all the revenue generated by a business during a stated period of time

Answer 12

gross revenue

Question 13

all labor not charged to a specific project or revenue-producing account, such as administration, general office time, and marketing

Answer 13

indirect labor

Question 14

claims by people outside the business and claims by the owners of the business against the total assets of the business

Answer 14

liabilities

Question 15

the money that remains from billing after deducting fees and expenses, reimbursable expenses, and non-reimbursable project-related expenses

Answer 15

net operating revenue (net revenue)

Question 16

miscellaneous resources such as securities and copyrights

Answer 16

other assets

Question 17

expenses incurred to keep a business operating whether or not any revenue is being generated, such as rent, software leases, and fees for power and telephone services

Answer 17

Overhead

Question 18

Accounting method in which revenue and expenses are recognized at the time the business receives the cash or pays a bill

Answer 18

Cash Accounting

Question 19

Accounting method in which revenue and expenses are recognized at the time they are earned or incurred, whether or not cash changes hands.

Answer 19

Accrual Accounting

Question 20

This accounting method is better at tracking actual cash flow

Answer 20

Cash accounting

Question 21

This accounting method gives a better picture of a business’s long-term financial status and provides information that is important for active financial management

Answer 21

Accrual Accounting

Question 22

This accounting method is fairly simple and is often used for a small firm

Answer 22

Cash accounting

Question 23

The IRS requires that firms of a certain size or those that maintain inventory use this accounting method

Answer 23

Accrual accounting

Question 24

Accounting method typically used by architectural firms that records fee revenue, expenses billed to the client, and invoices to the firm by outside consultants. It does NOT include the amounts of fees that have been earned by not yet billed to the client

Answer 24

Modified Accrual Basis

Question 25

a form of bookkeeping in which all transactions are listed chronologically in a journal and then posted to a ledger where they are grouped into individual accounts

Answer 25

Double-entry bookkeeping

Question 26

an accounting statement that summarizes all assets and liabilities. The assets listed must be equal to the liabilities plus any stockholders equity

Answer 26

Balance sheet

Question 27

an accounting statement that lists all the income and expenses of a business for a certain period of time. Used to determine if the business has recorded a profit or a loss during that period

Answer 27

Profit and Loss Statement, Income Statement

Question 28

An accounting statement that shows actual inflows and outflows of cash or cash equivalents

Answer 28

Cash flow statement

Question 29

Active planning, monitoring, and controlling of financial information as well as acting on that information

Answer 29

Financial Management

Question 30

A financial report that shows the hours and labor costs for each phase of a project for the current reporting period and total-to-date, then compares these numbers to the estimated hours and costs

Answer 30

Project progress report

Question 31

A financial report that summarizes each of the firm's projects in terms of the amount of revenue it has generated, the expenses it has incurred, unbilled services, percentage of completion, and profit or loss to date

Answer 31

Office earnings report

Question 32

A financial report that shows the status of all invoices of all projects, whether or not they have been paid, and the "age" of each invoice

Answer 32

Aged accounts receivable report

Question 33

A financial report that lists each employee along with the number of hours he or she has spent on direct labor, indirect labor (including marketing or professional development), vacation time, sick leave, and holidays

Answer 33

Time analysis report

Question 34

The percentage of time spent on direct labor, divided by the total time spent on direct and indirect labor, vacation time, sick leave, and holidays

Answer 34

Utilization rate (Chargeable ratio)

Question 35

Total current assets / Total current liabilities. Measures a firm's ability to meet current obligations

Answer 35

Current Ratio

Question 36

Percentage of profit based on net revenue (total annual revenue minus consultants' fees and reimbursable expenses)

Answer 36

Net profit before tax

Question 37

Total office overhead (or indirect expenses) / Total direct labor. Should be 1.30-1.50.

Answer 37

Overhead Rate

Question 38

More conservative refinement of Current Ratio because it only uses the most liquid assets. (Cash + Cash equivalents + accounts receivable + revenue earned by not billed) / total current liabilities.

Answer 38

Quick Ratio

Question 39

Amount of net revenue produced per technical staff member. Can be used to estimate the required net operating revenue for future budgets

Answer 39

Revenue per technical staff

Question 40

The amount of net revenue produced per staff member per year including all staff members

Answer 40

Revenue per Total Staff