UGBA 10 Accounting & Finance

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Questions and Answers

What does GDP stand for?

Global Development Plan

Gross Domestic Product (correct)

General Domestic Profit

Government Debt Profile

What is the definition of balance of trade?

The economic value of all the products that a country exports minus the economic value of its imported products.

What is profit calculated as?

Profit = np - nv - F, where p is price, v is variable cost per unit, n is units sold, and F is total fixed costs.

What is stockholders' equity?

The issuance of common stock that represents ownership in a company. Signup and view all the answers

What is the accounting equation?

Assets = Liabilities + Stockholder's Equity Signup and view all the answers

What does financial seniority refer to?

Liabilities are paid first before any cash remaining is paid to stockholders. Signup and view all the answers

What is a secured loan?

A loan to finance an asset, backed by the borrower pledging the asset as collateral. Signup and view all the answers

What does collateral refer to?

An asset pledged for the fulfillment of repaying a loan. Signup and view all the answers

What is an unsecured loan?

A loan where collateral is not required. Signup and view all the answers

What is loan principal?

The amount of money that is loaned and must be repaid. Signup and view all the answers

What is a corporate bond?

A formal pledge obligating the issuer to pay interest and repay the principal at maturity. Signup and view all the answers

What is a bond indenture?

A legal document containing complete details of a bond issue. Signup and view all the answers

What is face value?

How much the lender will receive on the maturity date. Signup and view all the answers

What does default mean in finance?

Failure to pay at the maturity date. Signup and view all the answers

What is a bondholder's claim?

A request for court enforcement of a bond's terms of payment. Signup and view all the answers

Who are angel investors?

Outside investors who provide new capital for firms in return for a share of equity ownership. Signup and view all the answers

What is a venture capitalist?

Private funds from wealthy individuals seeking investment opportunities in new growth companies. Signup and view all the answers

What is market capitalization?

The total dollar value of all the company's outstanding shares, calculated as share price multiplied by the number of shares outstanding. Signup and view all the answers

What does an audit entail?

A systematic examination of a company's accounting system to determine compliance with GAAP. Signup and view all the answers

What is the basis of the balance sheet?

The accounting equation. Signup and view all the answers

What is a current asset?

An asset that can or will be converted to cash within a year. Signup and view all the answers

What is a fixed asset?

An asset with long-term use or value such as land, buildings, or equipment. Signup and view all the answers

What does liquidity mean?

The ease at which an asset can be converted to cash. Signup and view all the answers

What is depreciation?

An accounting method for distributing the cost of an asset over its useful life. Signup and view all the answers

What is a current liability?

Debt that must be paid within the year. Signup and view all the answers

What is a long-term liability?

Debt that is not due for at least one year. Signup and view all the answers

What are accounts payable?

Current liability consisting of bills owed to suppliers. Signup and view all the answers

What are retained earnings?

Earnings retained by a firm for its use rather than paid out as dividends. Signup and view all the answers

What are intangible assets?

Non-physical assets, such as patents or trademarks, that have economic value. Signup and view all the answers

What is goodwill?

Amount paid for an existing business above the value of its other assets. Signup and view all the answers

What is the current ratio?

Current ratio = current assets/current liabilities. Signup and view all the answers

Study Notes

Key Accounting and Finance Concepts

GDP: Represents the total value of all goods and services produced in a country within a specific period, measuring the economy's aggregate output.
Balance of Trade: The difference between the value of exports and imports for a country, indicating a positive or negative balance.
Profit Formula: Profit is calculated as Profit = np - nv - F, where p is the selling price, v is variable costs, n is units sold, and F represents total fixed costs.
Stockholders' Equity (SE): Reflects ownership in a company through common stock issuance, indicating who owns the company.
Accounting Equation: Fundamental equation stated as Assets = Liabilities + Stockholders’ Equity, central to financial statements.
Financial Seniority: In liquidation, debt liabilities are settled before any payments to stockholders; often results in little or no value left for stockholders.
Secured Loan (Asset-Backed Loan): A loan that is secured by collateral, which can be an asset pledged by the borrower.
Collateral: An asset pledged by a borrower as security for a loan, examples include property and accounts receivable.
Unsecured Loan: A type of loan that does not require collateral from the borrower.
Loan Principal: The original sum of money borrowed that must be repaid to the lender.
Corporate Bond: A legal obligation where the issuer promises to pay periodic interest and repay the principal amount at maturity.
Bond Indenture: The legal document providing detailed terms of a bond issue.
Face Value: The amount that the bondholder receives upon the bond's maturity.
Default: The failure to fulfill the payment obligation by the maturity date of a bond.
Bondholder's Claim: A legal request to enforce the payment terms of a bond.
Angel Investors: Individual investors providing capital for startups in exchange for equity, generally investing smaller amounts compared to venture capitalists.
Venture Capitalist: Investors who provide funding to new growth companies, often from private sources, and may manage VC funds.
Market Capitalization: Calculated by multiplying the share price by the number of outstanding shares, indicating the total dollar value of a company.
Audit: A systematic examination of a company's financial records to ensure adherence to GAAP and accuracy in financial reporting.
Current Asset: Assets expected to be converted to cash within a year, enhancing liquidity.
Fixed Asset: Long-term assets, such as property and equipment, that are expected to provide value over time.
Liquidity: Measures how easily an asset can be converted into cash.
Depreciation: The accounting method used to allocate the cost of a tangible asset over its useful life.
Current Liability: Debts that are due to be paid within one year, affecting short-term financial health.
Long Term Liability: Debts that are not due for payment within one year, impacting long-term financial strategies.
Accounts Payable (Payables): Current liabilities that represent amounts owed to suppliers for goods or services received.
Retained Earnings: Profits kept within a company for reinvestment rather than being distributed as dividends.
Intangible Assets: Non-physical assets with expected economic benefits, like patents or trademarks.
Goodwill: The premium paid for acquiring an existing business over and above the value of its tangible assets.
Current Ratio: A liquidity ratio that measures the ability to pay current liabilities with current assets.

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Test your knowledge with flashcards on key concepts in Accounting and Finance for UGBA 10. This quiz covers essential terms like GDP and Balance of Trade, crucial for understanding economic principles. Perfect for revision and reinforcing your understanding of the subject matter.