Questions and Answers
What does GDP stand for?
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?
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What is the accounting equation?
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What does financial seniority refer to?
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What is a secured loan?
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What does collateral refer to?
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What is an unsecured loan?
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What is loan principal?
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What is a corporate bond?
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What is a bond indenture?
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What is face value?
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What does default mean in finance?
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What is a bondholder's claim?
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Who are angel investors?
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What is a venture capitalist?
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What is market capitalization?
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What does an audit entail?
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What is the basis of the balance sheet?
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What is a current asset?
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What is a fixed asset?
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What does liquidity mean?
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What is depreciation?
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What is a current liability?
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What is a long-term liability?
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What are accounts payable?
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What are retained earnings?
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What are intangible assets?
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What is goodwill?
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What is the current ratio?
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Study Notes
Key Accounting and Finance Concepts
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GDP: Represents the total value of all goods and services produced in a country within a specific period, measuring the economy's aggregate output.
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Balance of Trade: The difference between the value of exports and imports for a country, indicating a positive or negative balance.
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Profit Formula: Profit is calculated as
Profit = np - nv - F
, wherep
is the selling price,v
is variable costs,n
is units sold, andF
represents total fixed costs. -
Stockholders' Equity (SE): Reflects ownership in a company through common stock issuance, indicating who owns the company.
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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.
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Secured Loan (Asset-Backed Loan): A loan that is secured by collateral, which can be an asset pledged by the borrower.
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Collateral: An asset pledged by a borrower as security for a loan, examples include property and accounts receivable.
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Unsecured Loan: A type of loan that does not require collateral from the borrower.
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Loan Principal: The original sum of money borrowed that must be repaid to the lender.
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Corporate Bond: A legal obligation where the issuer promises to pay periodic interest and repay the principal amount at maturity.
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Bond Indenture: The legal document providing detailed terms of a bond issue.
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Face Value: The amount that the bondholder receives upon the bond's maturity.
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Default: The failure to fulfill the payment obligation by the maturity date of a bond.
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Bondholder's Claim: A legal request to enforce the payment terms of a bond.
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Angel Investors: Individual investors providing capital for startups in exchange for equity, generally investing smaller amounts compared to venture capitalists.
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Venture Capitalist: Investors who provide funding to new growth companies, often from private sources, and may manage VC funds.
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Market Capitalization: Calculated by multiplying the share price by the number of outstanding shares, indicating the total dollar value of a company.
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Audit: A systematic examination of a company's financial records to ensure adherence to GAAP and accuracy in financial reporting.
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Current Asset: Assets expected to be converted to cash within a year, enhancing liquidity.
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Fixed Asset: Long-term assets, such as property and equipment, that are expected to provide value over time.
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Liquidity: Measures how easily an asset can be converted into cash.
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Depreciation: The accounting method used to allocate the cost of a tangible asset over its useful life.
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Current Liability: Debts that are due to be paid within one year, affecting short-term financial health.
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Long Term Liability: Debts that are not due for payment within one year, impacting long-term financial strategies.
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Accounts Payable (Payables): Current liabilities that represent amounts owed to suppliers for goods or services received.
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Retained Earnings: Profits kept within a company for reinvestment rather than being distributed as dividends.
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Intangible Assets: Non-physical assets with expected economic benefits, like patents or trademarks.
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Goodwill: The premium paid for acquiring an existing business over and above the value of its tangible assets.
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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.