1. Define the process of accounting. Accounting is the process that results in the preparation and reporting of financial statements for an entity at a point in time and/or its results cash flows for a period of time. 2. What are the three major divisions in the accounting field? Internal Auditing: the practice of examination in the financial statements within a company by a third party with the objective of expressing an opinion about the fairness of the company’s financial position
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Finance has a close relationship to a number of other business disciplines. It is important that we understand why a finance major needs these other skills and abilities. Let's take them one at a time: 1. Economics provides the theory that finance uses. The field of finance is a very new discipline, beginning formally around 1920. Before that, financial problems were referred to as "economic problems" or (even earlier) "problems in political economy." During the 1920s, finance broke away
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Understanding Financial Concepts – Assignment I 1. Explain why market prices are useful to a financial manager Managers are interested in market prices for reasons better explain by market of economic theory. The classic market of economic theory is a call auction market where all market participants meet in one place at one time to arrive at a market clearing price through open outcry of bids and offers. In agricultural societies, these markets were often held annually, at harvest time, but
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Corporate Finance Basics Topics 1) 2) 3) 4) 5) 6) Capital Budgeting Cost of Capital Measures of Leverage Dividends and Share Repurchases Working Capital Management Financial Statement Analysis Capital Budgeting Introduction The Capital Budgeting Process is the process of identifying and evaluating capital projects, i.e., projects where the cash flow to the firm will be received over a period longer than a year. Capital budgeting usually involves the calculation of each project’s future accounting
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Ch 1: BASIC CONCEPTS IN FINANCE • Finance is the study of how resources are valued and allocated in time. • Outcomes of financial decisions are spread out over time and not known with certainty in advance • Three key concepts in finance are : Time value of money Asset Valuation (stocks, bonds, derivatives,...) Risk management 1.1: Interest and return • Income almost never matches consumption desires exactly. Either one will need to borrow to purchase more than one can afford or save
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Finance The study of money and how it is used. Finance considers the relationship of money to time and risk. One of the main subsets of finance is the study of credit and banking, as this involves money, time, and risk all together. Finance may deal with personal or corporate issues, such as how will an individual or company acquires the money needed to perform a certain act. Debt. A debt is an obligation to repay an amount you owe. Debt securities, such as bonds or commercial paper, are forms of
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27 THE BASIC TOOLS OF FINANCE WHAT’S NEW IN THE SIXTH EDITION: There are two new In the News boxes on “A Cartoonist’s Guide to Stock Picking” and “Is the Efficient Markets Hypothesis Kaput?” LEARNING OBJECTIVES: By the end of this chapter, students should understand: the relationship between present value and future value. the effects of compound growth. how risk-averse people reduce the risk they face. how asset prices are determined. CONTEXT AND PURPOSE: Chapter 27 is the
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Essential of Finance – Glossary Accounts payable (A/P). Money owed by the firm to agencies and suppliers. Accounts receivable (A/R). Money owed to a company for goods or services sold. The figure is important in determining a business's ability to meet its financial obligations. Accrual accounting. An accounting method whereby income and expenses are booked when they are incurred, regardless of when they are actually received or paid. Revenues are recognized during the period in which the
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Ch26-Basic Tools of Finance 1. The future value of a deposit in a savings account will be larger a. the longer a person waits to withdraw the funds. b. the higher the interest rate is. c. the larger the initial deposit is. d. All of the above are correct. 2. Edgar has four savings accounts. Which one has the most in it? a. $100 deposited 1 year ago at an 8% interest rate. b. $100 deposited 2 years ago at a 4% interest rate. c. $100 deposited 4 years
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Basics of Corporate Finance May 1994 Basics of Corporate Finance Warning These workbook and computer-based materials are the product of, and copyrighted by, Citibank N.A. They are solely for the internal use of Citi-bank, N.A., and may not be used for any other purpose. It is unlawful to reproduce the contents of these materials, in whole or in part, by any method, printed, electronic, or otherwise; or to disseminate or sell the same without the prior written consent of the Professional
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