CGCM Financial Management - Study
Guide Exam A+ Graded
Accelerated Depreciation - Answer A method of depreciation involving high write-offs in
the early years of an assets life and lower write-offs later. This method lowers the value
of an asset faster than straight-line depreciation.
Accounts Payable - Answer The value of goods and services acquired for which
payment has not yet been made.
Accounts Receivable - Answer The value of goods shipped or services provided for
which payment has not yet been received.
Acid Test Ratio - Answer A stringent test that indicates whether a firm has enough
short-term assets to cover its current liabilities without selling inventory. (synonym:
quick asset ratio)
= (Cash + Accts Receivable + Short term Investments) / Current Liabilities
Activity Based Budgeting (ABB) - Answer Method of budgeting in which the activities
that incur costs in every functional area of an organization are recorded and their
relationships are defined and analyzed. Activities are then tied to strategic goals and
the costs of the activities needed are used to create the budget. Activity based
budgeting stands in contrast to traditional, cost-based budgeting practices in which a
prior period's budget is simply adjusted for inflation or revenue.
Amortization - Answer The process of recovering (via expensing) a capital investment
over a period of time. The paying off of debt in regular installments over a period of time.
Annual Percentage Rate (APR) - Answer The rate of interest paid for a loan after
, compounding is considered.
Assets - Answer An accounting/financial term representing the resources owned by a
company (tangible or intangible).
Average Pricing - Answer A pricing approach using average cost as a basis to set price.
Balance Sheet - Answer A financial statement showing a firm's assets, liabilities and
equity capital.
Capital - Answer All the possessions of a business which are devoted to the earning of
income.
Capital Budgeting - Answer Actions relating to the planning and financing of capital
outlays for such purposes as the purchase of new equipment.
Capital Expenditure - Answer Money invested in a long-term asset, one that is expected
to last longer than one year. The asset is expected to generate a stream of future
benefits.
Cash Flow - Answer The net flow of dollars into or out of a project.
Cash Method of Accounting - Answer Accounting method by which revenue and
expenses are recognized when cash is received or payment is made.
Compound Interest - Answer Interest that is periodically added to the amount of
investment (or loan) so that subsequent interest is based on the cumulative amount.
Cost Analysis - Answer A review and evaluation of actual or anticipated cost data.
Guide Exam A+ Graded
Accelerated Depreciation - Answer A method of depreciation involving high write-offs in
the early years of an assets life and lower write-offs later. This method lowers the value
of an asset faster than straight-line depreciation.
Accounts Payable - Answer The value of goods and services acquired for which
payment has not yet been made.
Accounts Receivable - Answer The value of goods shipped or services provided for
which payment has not yet been received.
Acid Test Ratio - Answer A stringent test that indicates whether a firm has enough
short-term assets to cover its current liabilities without selling inventory. (synonym:
quick asset ratio)
= (Cash + Accts Receivable + Short term Investments) / Current Liabilities
Activity Based Budgeting (ABB) - Answer Method of budgeting in which the activities
that incur costs in every functional area of an organization are recorded and their
relationships are defined and analyzed. Activities are then tied to strategic goals and
the costs of the activities needed are used to create the budget. Activity based
budgeting stands in contrast to traditional, cost-based budgeting practices in which a
prior period's budget is simply adjusted for inflation or revenue.
Amortization - Answer The process of recovering (via expensing) a capital investment
over a period of time. The paying off of debt in regular installments over a period of time.
Annual Percentage Rate (APR) - Answer The rate of interest paid for a loan after
, compounding is considered.
Assets - Answer An accounting/financial term representing the resources owned by a
company (tangible or intangible).
Average Pricing - Answer A pricing approach using average cost as a basis to set price.
Balance Sheet - Answer A financial statement showing a firm's assets, liabilities and
equity capital.
Capital - Answer All the possessions of a business which are devoted to the earning of
income.
Capital Budgeting - Answer Actions relating to the planning and financing of capital
outlays for such purposes as the purchase of new equipment.
Capital Expenditure - Answer Money invested in a long-term asset, one that is expected
to last longer than one year. The asset is expected to generate a stream of future
benefits.
Cash Flow - Answer The net flow of dollars into or out of a project.
Cash Method of Accounting - Answer Accounting method by which revenue and
expenses are recognized when cash is received or payment is made.
Compound Interest - Answer Interest that is periodically added to the amount of
investment (or loan) so that subsequent interest is based on the cumulative amount.
Cost Analysis - Answer A review and evaluation of actual or anticipated cost data.
