Learning Objectives - Chptrs 14-17 Flashcards Preview

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Flashcards in Learning Objectives - Chptrs 14-17 Deck (30):
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14.1 Distinguish between data and information and discuss the role of information systems in business

Data - raw facts that may or may not be meaningful to a business decision

Information - knowledge gained from processing data

Information systems - an organized method of collecting, storing and communicating past, present, and projected information on internal operations and external intelligence

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14.2 Describe the components and types of information systems

Computer based information system - information systems that use computer and related technologies to store information electronically in an organized, accessible manner
Components
- computer hardware
- computer software
- telecommunications and computer networks
- data resource management

Types of information systems
Operational Support Systems - designed to produce a variety of information on an organization’s activities for both internal and external users
Management Support Systems - systems that are designed to provide support for effective decision making

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14.3 Outline how computer hardware and software are used to manage information

Hardware consists of all tangible physical elements of a computer system including output and input devices.

Software provides the instructions that tell the hardware what to do. The operating system is the is the software that controls the basic workings of the computer.

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14.4 Describe networking and telecommunications technology and the types of computer networks

Local area networks connect computers within a limited area. Wide area networks tie larger geographical regions together.

Wireless networks allow computers to communicate through radio waves.

Intranets allow employees to share information on a company network

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14.5 Outline the security and ethical issues affecting information systems

Security
1. Malware - malicious software that is designed to infect computer systems
2. Cyber crimes - hacking, theft of hardware

Ethical issues
1. Proper use of the system by users
2. Organization’s obligation to protect employee’s, vendor and customers confidentiality

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14.6 Explain how companies plan for, and recover from, information system disaster


- Routinely back up software and data
- Back up at an off-site location
- Invest in extra hardware and software sites

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14.7 Review the trends in information systems

- Increasing demands of the distributed workforce
- increasing use of application service providers
- on demand computing and grid computing
- virtual offices

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15.1 Explain the functions of accounting and identify three basic accounting activities

Accountants measure, interpret and communicate financial information to people inside and outside the firm to support informed decision making

1. Financing
2. Investing
3. Operating activities

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15.2 Describe the various types of accounting proffesionals

1. Public accountants provide accounting services to other firms or individuals for a fee. Perform auditing, tax returns, management consulting, etc

2. Management accountants are employed by a firm, where they collect and record financial transactions, prepare financial statements and interpret financial data for managers.

3. Government and not for profit accountants perform many of the same functions as management accountants but instead of looking for profits and losses they look for at how effectively the organization is operating

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15.3 Discuss the foundation of the accounting system

In Canada it is GAAP (generally accepted accounting principles) a set of guidelines and standards that accountants follow.

Basic characteristics of the financial statements are consistency, relevance, representational faithfulness, reliability, timeliness, understandability, verifiability and comparability

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15.4 Outline the steps in the accounting cycle

1. Recording transactions
2. Classifying the transactions
3. Summarizing the transactions
4. Using the summaries to produce financial statements

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15.5 Explain the functions and major components of the four principal financial statement

1. Balance Sheet - assets, liabilities and owner’s equity
2. The income statement - results of the firm’s operations over a specific time period. Focuses on revenues and expenditures and result profit and loss.
3. The statement of changes in equity - Shows the change in the owner’s equity from the end of the previous year to the end of the current year
4. The statement of cash flow - shows the firm’s cash receipts and cash payments during an accounting period

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15.6 Discuss how financial ratios are used to analyze a company’s financial strengths and weaknesses

Just put the whole answer in because I didn’t quite understand what is important and what is not.

Liquidity ratios measure a firms ability to meet its short term obligations. Examples are the current ratio and the quick ratio, also called the acid test ratio. Activity ratios such as the inventory turnover ratios, the accounts receivable turnover ratio and the total asset turnover ratio, measure how effectively a firm uses it resources. Probability ratios assess the overall financial performance of the business. Examples re the gross profit margin, the net profit margin, and the return on on owners equity. Leverage ratios, such as the total liabilities to total assets ratio and the long term debt to equity ratio, measure the extent to which the firm relies on debt to finance its operations. Financial ratios help managers and outside evaluators compare. A firms current financial information twitch that of previous years and with the results for their firms in the same industry.

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15.7 Describe the role of budgets in business

Budgets are financial guidelines for future periods. The show the firm’s expected sales revenue, operating expenses, cash receipts and cash expenses.

They provide standards against which actual performance can be measured.

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15.8 Outline the accounting issues facing global business

1. Exchange rates - daily changes in rates affect the accounting entires

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16.1 Outline the structure and importance of the financial system

The financial systems it the process by which funds are transferred between those that have excess funds (savers) and those who need funds (users).

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16.2 List the various types of securities

Money market instruments
Bonds
Shares

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16.3 Define financial market and distinguish between primary and secondary financial markets

A financial market is a market where securities are bought and sold

The primary market for securities serves businesses and government that want to sell new security issues to raise funds

The secondary market handles transaction of previously issued securities between investors

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16.4 Describe the characteristics of the major stock exchanges

New York, Toronto, Japan and London stock exchanges. New York is the largest

NASDAQ - electronic market where buy and sell orders are entered into a computerized communication system

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16.5 Discuss how financial institutions are organized and how they function

Financial institutions act as intermediaries between savers and users of funds.

Depository institutions accept deposits from customers that can be exchanged for cash on demand (ex - banks and credit unions)

Canada deposit Insurance corporation - government agency that insures deposits at financial institutions.

Non depository institutions - pensions funds and insurance companies

Mutual funds - sell shares t investors and in turn invest the proceeds into securities

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16.6 Explain the function of the Bank of Canada and the tools it uses to carry out these functions

The central bank of Canada.
- Regulates the monetary policy
- designs and issues banknotes
- regulates the financial system
- manages funds for the federal government and other clients

Tools
- the bank rate and open market operations
- selective credit control
- purchase and sale of foreign currency

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16.7 Describe the regulation of the financial system

Commercial banks, savings banks and credit unions in Canada are heavily regulated by federal banking authorities

Banking regulators require institutions to follow sound banking practices

Financial markets are regulated at the provincial level

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16.8 Describe the global financial system

Investors in other countries purchase Canadian securities and Canadian investors purchase foreign securities.

Large Canadian banks have a global presence. They accept deposits, make loans and have branches throughout the world. Foreign banks also operate world wide.

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17.1 Explain the role of Financial Managers

Major responsibilities are carrying out financial plans and deciding on the most appropriate sources and use of funds. When making decisions, financial professionals continually balance risks with expected financial returns.

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17.2 Describe the parts of a financial plan and the financial planning process

A financial plan is a document that specifies the funds needed by a firm for a given period of time, the timing of cash inflows and outflows and the most appropriate sources and use of funds.

The financial plan addresses three questions
1. What funds will be required during the planning period?
2. When will funds be needed?
3. Where will fund be obtained?

The financial planning process involves three steps
1. Forecasting sales over a period of time
2. Estimating the expected level of profits over the planning period
3. Deciding on the additional assets needs to support the additional sales

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17.3 Outline how organizations manager their assets

Sound financial management requires assists to be acquired and managed as effectively and efficiently as possible.

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17.4 Discuss the two major sources of funds for a business and capital structure

Businesses have to sources of funds
1. Debt capital - funds obtained through borrowing
2. Equity capital - funds provided by the firms owners

Capital structure - The mix of debt and equity for the firm. Financial’s manager job is to find the proper mix

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17.5 Identify sources of short-term financing for businesses (there are three)

1. Trade credit - extended by suppliers when a firm receives goods or services and agrees to pay at a later date
2. Short term loans from banks or other financial institutions - easily obtained. Can be either secured or unsecured
3. Commercial paper - a short term IOU sold by a company

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17.6 Discuss long-term financing options

Acquired through three sources
1. Long term loans from financial institutions
2. Bonds sold to investors
3. Equity financing

Public sales of securities, such as shares and bods, are a major source of financing for a company

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17.7 Describe mergers, acquisitions and buyout

Merger - a transaction where two or more firms combine into one company
Acquisition - a transaction where one company buys another
Leveraged buyout - a transaction where shares are purchased from public shareholders and the company reverts to private status.