Flashcards in Marketing and finance 2: FINANCE (Part B) Deck (20):
a process of ID, recording, summarising and reporting economic information to decision makers in the form of financial statements
Define financial accounting
focuses on specific needs of decision makers external to the organisation, such as stockholders, suppliers, banks and government agencies
the study of how and under what terms savings (money) are allocated b/w leaders and borrowers. Not that finance is distinct from economics in that it addresses not only how resources are allocated but also under what terms and through which channels
What is the accounting system?
a series of steps performed to analyse, record, quantify, accumulate, summarise, classify, report and interpret economic events and their effects on an organisation and to prepare the financial statements
What do managers want to know in terms of accounting?
if a new product will be profitable
What do owners wan to know in terms of accounting?
which employees are productive
What do investors want to know?
if a company is a good investment
What do creditors want to know?
if they should extend credit, how much to extend and for how long
What do government regulators want to know?
if financial statements conform to requirements
What are the 2 key questions of financial management and accounting?
- what is the financial picture of the organisation on a given day?
- how well did the organisation do during a given period?
What is a balance sheet?
financial picture on a given day that shows assets, liabilities, shareholder equity and net worth
What is a profit and loss account?
considers total outgoings and total income in terms of performance over a given period
What is a cash flow statement?
documents the cash (liquid asset) status of the company and its performance over a given period
What are the key performance indicators?
profit margins, sales per staff member, customer satisfaction, staff training/ CPD
What can yo use for benchmarking?
- key performance indicators
- processes (quality control of customer services)
What business decisions are faced by vets?
- new services
- old services
- new premises
- more/less staff
- different staff
- staff training/ CPD
- market development
- new equipment/ capital
What issues should be considerd with financial decision making?
- costs forgone
- new revenue to be gained
- short/ medium and long-term outcomes
- market requirements
- true boundaries of possibility
T/F: there are many differences b/w accounting and finances
What are the 3 major financial statements?
- balance sheet
- profit and loss statement
- cash flow statement