MTEL Business (19) flashcards
MTEL Business (19) · Build recall with a focused review session.
33 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Accounting equation
- Assets equal liabilities plus owner's equity. Every transaction preserves the balance, and the statement of owner's equity links net income and withdrawals to ending capital.
- Double-entry accounting
- Each transaction is recorded with equal total debits and credits in at least two accounts, which keeps the accounting equation in balance and permits a trial balance check.
- Current ratio
- Current assets divided by current liabilities. It measures ability to pay short-term obligations; a ratio below 1 suggests possible liquidity strain.
- Quick ratio
- Cash plus marketable securities plus receivables, divided by current liabilities. It excludes inventory, so it is a stricter liquidity test than the current ratio.
- Break-even point
- The sales volume at which total revenue equals total cost. In units it equals fixed costs divided by the per-unit contribution margin.
- Contribution margin
- Sales revenue minus variable costs. The contribution margin ratio equals contribution margin divided by sales and shows the share of each sales dollar covering fixed costs.
- FIFO inventory method
- First-in, first-out assigns the oldest inventory costs to cost of goods sold. During rising prices it produces higher ending inventory and higher reported profit than LIFO.
- LIFO inventory method
- Last-in, first-out assigns the newest costs to cost of goods sold. During inflation it lowers taxable income but is not permitted under IFRS.
- Gross profit margin
- Net sales minus cost of goods sold, divided by net sales. It shows the percentage of each sales dollar remaining after product costs.
- Trial balance
- A listing of all ledger account balances at a point in time. Total debits must equal total credits, though equality does not prove every entry was correct.
- Accrual accounting
- Revenue is recorded when earned and expenses when incurred, regardless of cash timing. It requires adjusting entries for accruals and deferrals at period end.
- Depreciation expense
- Systematic allocation of a long-lived asset's cost over its useful life. Straight-line equals (cost minus salvage value) divided by useful life in years.
- Marketing mix
- The four Ps: product, price, place, and promotion. Managers adjust these controllable elements to reach a chosen target market segment.
- Price elasticity of demand
- Percentage change in quantity demanded divided by percentage change in price. Absolute values above 1 indicate elastic demand; below 1 indicates inelastic demand.
- Market segmentation
- Dividing a broad market into groups with shared needs, such as demographic, geographic, psychographic, or behavioral traits, so marketing can target each group precisely.
- Product life cycle
- Stages a product passes through: introduction, growth, maturity, and decline. Pricing and promotion strategies typically change at each stage.
- Sole proprietorship
- A business owned by one person. It is simple and taxed once, but the owner bears unlimited personal liability for business debts.
- Limited liability company
- A hybrid entity giving owners limited liability like a corporation while often allowing pass-through taxation like a partnership, depending on elections and jurisdiction.
- Consideration in contracts
- Something of legally sufficient value exchanged by the parties, such as money, property, or a promise. Without consideration a promise is generally unenforceable.
- Statute of Frauds
- A rule requiring certain contracts to be in writing, including land sales, contracts not performable within one year, and promises to pay another's debt.
- Federal Reserve tools
- Open market operations, reserve requirements, and the discount rate. Buying securities and lowering reserve requirements expand the money supply and tend to lower interest rates.
- Opportunity cost
- The value of the best alternative forgone when a choice is made. It is a relevant cost in decision making even though it never appears in accounting records.
- Fixed versus variable costs
- Fixed costs stay constant across a relevant range of output; variable costs change in proportion to volume. Total cost equals fixed cost plus variable cost per unit times units.
- Span of control
- The number of subordinates reporting to one manager. A narrow span creates a taller hierarchy; a wide span creates a flatter organization.
- Maslow's hierarchy
- A motivation model ordering needs from physiological and safety through belonging, esteem, and self-actualization. Lower needs are typically addressed before higher ones.
- SWOT analysis
- A planning tool that lists internal strengths and weaknesses alongside external opportunities and threats to guide strategy formulation.
- Promissory note
- A written promise by one party to pay a specified sum to another on demand or at a set date, often with stated interest.
- Negotiable instrument
- A signed writing promising or ordering payment of a fixed sum, payable on demand or at a definite time, to order or bearer.
- Business cycle phases
- Expansion, peak, contraction or recession, and trough. Unemployment typically rises during contraction and falls during expansion.
- Comparative advantage
- A country or firm gains by specializing in goods it produces at lower opportunity cost than trading partners, even if it is less efficient at everything.
- Balance sheet
- A financial statement listing assets, liabilities, and owner's equity at a specific date. It reports financial position rather than results of operations.
- Statement of cash flows
- A statement classifying cash receipts and payments as operating, investing, or financing activities, reconciling beginning and ending cash balances.
- Agency relationship
- A principal authorizes an agent to act on the principal's behalf. The agent owes fiduciary duties of loyalty, obedience, and accounting to the principal.