ENTREPRENEUR REVIEWER PDF

ENTREP REVIEWER (TERMS) Factors that affect Product cost Direct materials Cost-Plus Pricing Strategy - the raw materials or parts that are - allows for easily calculating the...

ENTREP REVIEWER (TERMS) Factors that affect Product cost Direct materials Cost-Plus Pricing Strategy - the raw materials or parts that are - allows for easily calculating the directly used to manufacture products. minimum price that will cover all costs Direct labor costs and ensure the desired profitability - these include any wages, payroll taxes, Variable Cost benefits, and insurance that a business - costs that fluctuate based on the level or business owner pays to employees of production or sales who are directly involved in the Selling Price manufacturing process - The amount a customer pays to Indirect material costs purchase a product. - these manufacturing overhead costs - includes the cost of the product and may include expenses like the any markup applied by the seller. machinery or materials used in the Breakeven Point production process that are not - The point at which total revenue directly traceable to the final product. equals total costs, meaning the Indirect labor costs business is not making a profit but is - these manufacturing overhead costs also not incurring a loss. include wages, benefits, and the Fixed Cost insurance paid to employees who are - costs that remain constant regardless not directly involved in the of production levels, such as rent, manufacturing process but are crucial salaries, and insurance. to its completion Retail Price Supply costs - the price at which a product or service - These are a retailer's version of material is sold to customers costs, as they are the expenses tied to Cost purchasing products from vendors. - the total expenses incurred in Overhead costs producing or purchasing a product, - expenses that retailers have that are including direct costs and indirect directly involved in selling costs merchandise. Markup Alternative Pricing Methods - a fixed percentage added to the Value-Based Pricing production or purchase cost to achieve - It is a customer-centric method that profit sets prices based on the value the Product cost customer perceives a product or - an accounting term refers to the total service to be. costs of making a product and getting Penetration Pricing it ready for sale. - is a strategy used by retailers to quickly Includes: secure a significant market share by - the cost of direct materials, setting low prices initially to encourage - direct labor costs and more customers to purchase the - manufacturing overhead costs. product or service  Owner’s Equity (or sometimes capital) Competitive Pricing - refers to the residual interest of the - is a pricing method where retailers owners in the assets of a company determine their prices according to after all liabilities are settled their competitors. - the owner’s rights to the assets of the - Also known as competitor-oriented business pricing. Sole proprietorships - owner's equity Skim pricing Partnerships - partners' equity - is a pricing strategy that sets new Corporations - stockholders' equity product prices high and subsequently Stockholders' equity lowers them as competitors enter the - represents the portion of total assets market that is left to the stockholders of a corporation after all of its liabilities are Account paid - a record in an accounting system that Revenues tracks the financial activities of a - refer to economic benefits received specific asset, liability, equity, revenue, from business activities or expense. - "increases” in economic benefits - These records increase and decrease during the accounting period in the as the business events occur form of increases in assets or decreases throughout the accounting period. in liabilities that result in increases in Assets equity - refer to resources owned and Expenses controlled by the entity as a result of - refer to costs incurred in conducting past transactions and events, from business which future economic benefits are - "decreases” in economic benefits expected to flow to the entity. during the accounting period in the Current Assets form of decreases in assets or increases - Will get converted into cash within a in liabilities that result in decreases in time frame of one year equity - Short term investments Non-current Assets Income Statement - Will not get converted into cash within - details the company’s revenue and one year expense accounts to calculate net - Long-term deferred tax assets profit or loss within an accounting Liabilities period. - refer to the economic obligations of an - company’s financial performance, entity. showing whether it made a profit or - technically defined as a "present incurred a loss during a particular obligation of an enterprise period. Current Liabilities Profit - those that are due within a year - The financial gain when revenues Non-current (long-term) liabilities exceed expenses in a specific period. - those that are due after more than one year Loss - increased by owner contributions and - The negative financial result when income, and decreased by withdrawals expenses exceed revenues. and expenses. Sales Cash - The total income a business earns from - The money a business has on hand, selling goods or services to its including currency, coins, and funds customers available in bank accounts, which can Rent Expense be used immediately for expenses or - The cost a business incurs for leasing investments office space, buildings, or equipment Sales Revenue Utilities Expense - ‘top line’ - The cost associated with using utilities - signifies the total revenue generated like telecommunications services, gas, from the company’s core business water, and electricity. activities Accounts Receivable Cost of Goods Sold (COGS) - Money owed to a company by its - represents the direct costs related to customers for goods or services that producing the goods a company sells have been delivered but not yet paid Expense Account for - include all costs not directly tied to Accounts Payable production - The amounts a company owes to Operating Expenses suppliers or creditors for goods or - refer to the costs incurred as part of services received but not yet paid for maintaining the day-to-day operations Land of your business. - A long-term asset represents the value General and Administrative Expenses of the land owned by a business. - expenditures required to administer a Building business. - A physical structure owned by the Operating Profit (EBIT) business that is used for its operations - providing an understanding of a recorded as a long-term asset company’s profitability from its core Prepaid Expense business operations, excluding interest - Payments made in advance for goods and taxes or services, which will be recognized as Earnings Before Taxes (EBT) expenses over time - represents the income that a company Inventory has earned before taxes are deducted - Goods or materials a company holds Earnings Before Interest Tax Depreciation for resale or production and Amortization Capital - measures the company’s operating - The funds or financial resources that a performance business uses for its operations, Depreciation growth, and investment, often - refers to the decrease in the value of referring to the owner's equity in the physical assets over time business Amortization - refers to the gradual reduction of debt over a specific period Earnings Per Share (EPS) shareholders in exchange for company - measures profitability by calculating shares. the earnings available to each - may include common stock and shareholder. preferred stock. Net income (net profit or net earnings) Retained Earnings - refers to revenue that remains as - The accumulated profits that profit for a company after accounting the company has earned over time, for all costs, expenses, taxes, interest, which have not been distributed as and dividends. dividends to shareholders Types of income statements - used to reinvest in the company or pay Single-step income statement off debt. - a simplified format that consolidates GAAP - Generally Accepted Accounting all revenues, gains, expenses, and Principles losses 3 Sections of Cash Flow Statement - provides a clear snapshot of net Operating activities earnings but lacks a detailed - are those cash flow activities that breakdown of revenues and expenses either generate revenue or record the Multi-step income statement money spent on producing a product - offers a more detailed view of a or service. company’s financial health Investing activities - Separates operational revenues and - records the gains and losses caused expenses from non-operational ones, due to investment in assets like providing insights into the core property, plant, or equipment (PPE) business activities. thus reflecting the overall change in Horizontal Format the cash position for a company - provides a comparative view of - CapEx financial data over multiple accounting - the money that a business invests on periods fixed assets like buildings, vehicles, or - helps identify trends and growth land. patterns, line by line Financing activities Vertical Format - records the cash flow between the - Also known as a common size analysis company and its owners and creditors - the vertical format expresses each line item as a percentage of total revenue for a given period Balance Sheet - Financial statement of a company that gives a snapshot of the company’s financial health at a specific point in time - provides information about the company’s assets, liabilities, and equity, Capital Stock - represents the initial investment made by the company’s owners or ENTREP REVIEWER (FORMULAS)