OSAT Business Education flashcards

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 recorded transaction preserves this balance, so the statement of financial position always balances after each entry.

Double-Entry Bookkeeping

Each transaction is recorded with equal total debits and total credits in at least two accounts. This self-checking system keeps the accounting equation in balance.

Normal Account Balance

The side on which an account increases: assets, expenses, and drawings are debit-normal; liabilities, equity, and revenue are credit-normal.

Trial Balance

A listing of all ledger account balances at a date, used to verify that total debits equal total credits before preparing financial statements.

Accrual Basis

Revenue is recorded when earned and expenses when incurred, regardless of cash timing. Required under GAAP; contrasts with cash-basis accounting.

Matching Principle

Expenses are recognized in the same period as the revenues they help generate, which is why adjusting entries allocate costs such as depreciation and prepaid rent.

Closing Entries

Entries that transfer revenue, expense, and drawing balances to the owner's capital account at period end, leaving temporary accounts at zero for the next period.

Depreciation Expense

Straight-line method equals (cost minus salvage value) divided by useful life. It allocates an asset's cost over periods benefited rather than valuing the asset.

Gross Profit

Net sales minus cost of goods sold. Expressed as a percentage of net sales, it measures profitability before operating expenses are deducted.

Break-Even Point

Fixed costs divided by contribution margin per unit (price minus unit variable cost). It is the sales volume at which total revenue equals total cost.

Contribution Margin

Unit selling price minus unit variable cost. It shows how much each sale contributes toward covering fixed costs and then generating operating profit.

Current Ratio

Current assets divided by current liabilities. A liquidity measure of short-term debt-paying ability; a ratio below 1 signals potential cash strain.

Marketing Mix

The four Ps: product, price, place, and promotion. For services, people, process, and physical evidence are added as the extended mix.

Market Segmentation

Dividing a broad market into groups with shared needs or traits using demographic, geographic, psychographic, or behavioral bases, then targeting selected segments.

Limited Liability

Owners of corporations and LLCs generally risk only invested capital, not personal assets. Sole proprietors and general partners bear unlimited personal liability.

Contract Elements

A valid contract requires offer, acceptance, consideration, capacity, and legality. Without any one element, the agreement may be unenforceable.

Law of Demand

All else equal, quantity demanded falls as price rises and rises as price falls. The demand curve slopes downward; supply curves generally slope upward.

Opportunity Cost

The value of the next-best alternative forgone when a choice is made. It underlies scarcity-based decisions in economics and personal finance.

Federal Reserve Functions

The U.S. central bank conducts monetary policy, supervises banks, and operates payment systems. It influences credit conditions and the money supply.

Compound Interest

Interest earned on both principal and previously accumulated interest. Balance equals principal times (1 plus rate) raised to the number of periods.

Time Value of Money

A dollar today is worth more than a dollar later because it can earn interest. Future value equals present value times (1 plus rate) to the periods.

Net Present Value

Present value of expected cash inflows minus initial investment. A positive NPV suggests the project adds value at the chosen discount rate.

Payback Period

The time required for cumulative cash inflows to equal the initial investment. It is simple but ignores cash flows after payback and the time value of money.

Maslow's Hierarchy

Motivation theory ordering needs from physiological and safety through belonging, esteem, and self-actualization. Lower needs are typically addressed before higher ones.

Span of Control

The number of subordinates reporting to one manager. Narrow spans create tall hierarchies; wide spans create flatter organizations with more delegation.

SWOT Analysis

A planning tool sorting internal strengths and weaknesses against external opportunities and threats to guide strategy formulation and goal setting.

Business Cycle

Recurring economy-wide phases of expansion, peak, contraction, and trough. Unemployment and inflation behave differently across phases, affecting business decisions.

Entrepreneurship

Identifying an opportunity, assembling resources, and accepting risk to create a new venture. A written business plan typically covers market, operations, and financial projections.

Ethical Dilemma

A situation where competing values make the right action unclear. Analysis weighs stakeholders, consequences, duties, and the organization's code of conduct.

Digital Citizenship

Responsible, legal, and safe use of technology, covering acceptable use, privacy, netiquette, security, and respect for intellectual property such as copyright.

Spreadsheet Formula

An expression beginning with an equals sign that calculates values using cell references and functions. Relative references adjust when copied; absolute references stay fixed.

Assessment Validity

The degree to which a test measures what it is intended to measure. Reliability, by contrast, concerns consistency of scores across occasions or raters.

Work-Based Learning

Instructional experiences connecting school to careers, such as internships, cooperative education, and job shadowing, typically paired with reflection and supervision.