Praxis Business Education flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Span of control

The number of subordinates who report directly to one manager. A narrow span produces a tall hierarchy; a wide span produces a flat structure with more delegation.

Break-even point in units

Fixed costs divided by the contribution margin per unit, where contribution margin equals price minus variable cost per unit. It is the sales volume at which profit is zero.

Contribution margin ratio

Price minus variable cost per unit, divided by price. It states the fraction of each sales dollar available to cover fixed costs and then contribute to profit.

Current ratio

Current assets divided by current liabilities. It measures whether short-term resources cover obligations due within one year; a ratio below one signals possible liquidity strain.

Quick ratio

Cash plus marketable securities plus receivables, divided by current liabilities. It excludes inventory and prepaid items, so it tests liquidity more strictly than the current ratio.

Present value

Future value divided by one plus the periodic interest rate raised to the number of periods. It converts a future cash amount into today's dollars for comparison.

Autocratic leadership

A style in which the leader centralizes authority and makes decisions with little input from subordinates. It can speed decisions but may reduce morale and initiative.

Controlling function

The management process of measuring actual performance against established standards, identifying deviations, and taking corrective action. It closes the loop begun by planning.

Accounting equation

Assets equal liabilities plus owner's equity. Every transaction changes at least two elements while keeping the equation in balance through equal debits and credits.

Debit and credit rules

Debits increase assets, expenses, and dividends. Credits increase liabilities, equity, and revenue. Each account's normal balance sits on its increase side.

Accrual basis accounting

Revenue is recorded when earned and expenses when incurred, regardless of cash timing. It differs from cash basis, which records items only when cash moves.

Adjusting entries

End-of-period entries that update accounts for accruals such as unpaid expenses and unbilled revenue, and for deferrals such as prepaid expenses and unearned revenue.

Straight-line depreciation

Cost minus estimated salvage value, divided by useful life in years. It allocates an equal depreciation expense to each full year the asset is used.

Closing entries

Entries that zero out temporary accounts, meaning revenues, expenses, and dividends, and transfer the resulting net income or loss into retained earnings.

Contract elements

Offer, acceptance, consideration, capacity, and legality. A contract missing any required element is generally void, voidable, or unenforceable.

Respondeat superior

A doctrine holding a principal or employer liable for torts an employee commits within the scope of employment. It usually does not extend to independent contractors.

Market segmentation

Dividing a broad market into groups of buyers who share needs, traits, or behaviors. Targeting then selects which segments to serve and positioning shapes their perception.

Product life cycle

The sequence of introduction, growth, maturity, and decline that a product passes through. Pricing, promotion, and competition shift at each stage.

SWOT analysis

A planning tool pairing internal strengths and weaknesses with external opportunities and threats. The TOWS matrix converts the pairs into actionable strategies.

Penetration pricing

Setting a low introductory price to win market share quickly and discourage entrants. It works when demand is price sensitive and costs fall with volume.

Price skimming

Setting a high introductory price to capture buyers willing to pay a premium, then lowering it over time. It suits innovative products with few early competitors.

Customer acquisition cost

Total sales and marketing spending divided by the number of new customers gained in the period. It is compared with customer lifetime value to judge sustainability.

Conversion rate

The number of desired actions, such as purchases, divided by the number of visitors or impressions, expressed as a percentage. It measures marketing effectiveness.

Push versus pull strategy

A push strategy promotes to channel members to move product to consumers. A pull strategy promotes to end consumers so they demand the product from retailers.

Elevator pitch

A brief persuasive summary covering the problem, solution, target market, business model, traction, and the specific ask. It is used to open investor conversations.

Absolute cell reference

A reference such as $A$1 that stays fixed when a formula is copied to another cell. Relative references shift; mixed references lock only the row or column.

IF function

A spreadsheet function that tests a logical condition and returns one specified value when the test is true and another when it is false.

VLOOKUP function

A spreadsheet function that searches the first column of a range for a value and returns a value from a specified column in the same row of that range.

Third normal form

A database design rule removing transitive dependencies, so non-key fields depend only on the primary key. It follows first and second normal form.

Virtual private network

A service that encrypts traffic between a remote user and the organization's network over a public connection, protecting confidentiality on untrusted networks.

Business memo format

A header with To, From, Date, and Subject, followed by a direct opening, organized body, and clear closing. It omits a salutation and complimentary close.

Active voice

A sentence structure in which the subject performs the action, as in the manager approved the budget. It is generally clearer and more direct than passive voice.