Intro to Business

The money that a business earns in sales (or revenue), minus expenses, such as the cost of goods, and the cost of salaries, Revenue – Expenses = Profit (or Loss)

When a business incurs expenses that are greater than revenue.

People who risk their time, money, and other resources to start and manage businesses.

The quality and quantity of goods and services available to a population.

The overall sense of well being experienced by either an individual or a group.

Business-like establishments that employ people and produce goods and services with the fundamental goal of contributing to the community rather than generating financial gain.

A market structure with only a handful of competitors selling products that are either similar or different. Barriers to entry are typically high.

A market structure with one producer completely dominating the industry, leaving no room for any significant competitors. Barriers to entry tend to be virtually insurmountable.

Four fundamental elements – natural resources, capital, human resources, and entrepreneurship – that businesses need to achieve their objectives. Some combination of these factors is crucial for an economic system to create wealth.

A market structure with one company as the supplier of a product because the nature of that product makes a single supplier more efficient than multiple, competing ones. Most natural monopolies are government sanctioned and regulated.

The setting in which business operates. The five key components are economic environment, competitive environment, technological environment, social environment, and global environment.

The quantity of products that producers are willing to offer for sale at different market prices.

The relationship between the price of a good or service and the benefits that it offers its customers.

The graphed relationship between price and quantity from a supplier standpoint.

The rate at which a new product moves from conception to commercialization.

The quantity of products that consumers are willing to buy at different market prices.

Any tools-especially computers, telecommunications, and other digital products-that businesses can use to become more efficient and effective.

The graphed relationship between price and quantity from a customer demand standpoint.

The service that allows computer users to easily access and share information on the internet in the form of text, graphics, and animation.

The price associated with the point at which the point at which the quantity demanded of a product equals the quantity supplied.

Business transactions conducted online typically via the internet.

An economic system based on the principle that the government should own and operate key enterprises that directly affect public welfare.

The measurable characteristics of a population. Demographic factors include population size and density, and specific traits such as age, gender, and race.

An economic and political system that calls for public ownership of virtually all enterprises, under the direction of a strong central government.

An international economic and political movement designed to help goods and services flow more freely across international boundaries.

Economies that embody elements of both planned and market-based economic systems.

An international trade agreement that has taken bold steps to lower tariffs and promote free trade worldwide.

A financial and social system of how resources flow through society, from production, to distribution, to consumption.

The process of converting government-owned businesses to private ownership.

The study of a country’s overall economic issues, such as the employment rate, the gross domestic product, and taxation policies.

The total value of all final goods and services produced within a nation’s physical boundaries over a given period of time.

The Study of smaller economic units such as individual consumers, families, and individual businesses.

The percentage of people in the labor force over age 16 who do not have jobs and are actively seeking employment.

An economic system-also known as the private enterprise or free market system-based on private ownership, economic freedom, and fair competition.

The periodic of economic downturn, marked by rising unemployment and falling business production.

An economic downturn marked by a decrease in the GDP for two consecutive quarters.

An especially deep and long-lasting recession.

A period of rising economic growth and employment.

A period of robust economic growth and high employment.

A period of rising average prices across the economy.

An average monthly inflation rate of more than 50%

A period of slowing average price increases across the economy.

A period of falling average prices across the economy.

A measure of inflation that evaluates the change over time in the weighted average wholesale prices.

The basic relationship between the production of goods and services (output) and the resources needed to produce them (input), calculated via the following equation: output/input=productivity.

The Total amount of money within the overall economy.

Includes all currency plus checking accounts and traveler’s checks.

The Federal Reserve function of buying and selling government securities, which include treasury bonds, notes, and bills.

The rate of interest that the Federal Reserve charges when it loans funds to banks.

A rule set by the Fed, which specifies the minimum amount of reserves (or funds) a bank must hold, expressed as a percentage of the bank’s deposits.

A federal agency that insures deposits in banks and thrift institutions for up to $100,000 per customer, per bank.

A form of business ownership with a single owner who usually actively manages the company.

A voluntary agreement under which two or more people act as co-owners of a business for profit.

A partnership in which all partners can take an active role in managing the business and have unlimited liability for any claims against the firm.

A partnership that includes at least one general partner and limited partner. Both partners contribute financially and share profits. General partners actively manage the company, accepting unlimited liability for debts while limited partners do not actively manage in exchange for limited liability.

When owners are not personally liable for claims against their firm. Limited Liability owners may lose their investment in the company, but their personal assets are protected.

Form of partnership in which all partners have the right to participate in management and have limited liability for company debts.

A form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners.

The most common type of business corporation, where ownership offers limited liability to all of its owners, also called stockholders.

The document filed with a state government to establish the existence of a new corporation.

The basic rules governing how a corporation is organized and how it conducts its business.

An owner of a corporation.

An organization that pools contributions from investors, clients, or depositors and uses these funds to buy stocks and other securities.

The individuals who are elected by stockholders of a corporation to represent their interests.

A form of corporation that avoids double taxation by having its income taxed as if it were a partnership.

A corporation with a limited number of owners that files special articles of incorporation allowing it to operate under simpler, less formal rules than a general corporation.

A corporation that does not seek to earn a profit and differs in several fundamental respects from general corporations.

A corporate restructuring in which one firm buys another. After the acquisition, the target firm (the one being purchased) ceases to exist as an independent entity, while the acquiring firm continues to operate.

A corporate restructuring that occurs when two formerly independent business entities combine to form a new organization.

A combination of two firms that are in the same industry.

A combination of two firms at different stages in the production of a good or service.

A combination of two firms that are in unrelated industries.

Form of business ownership which combines the limited liability of corporations with the tax pass-through of partnerships, eliminating the problem of double taxation.

A contractual relationship in which an established business entity allows others to operate a business using unique resources that it supplies in exchange for monetary payments and other considerations.

The party in a franchise relationship that pays for the right to use resources supplied by the franchisor.

A broad franchise agreement in which the franchisee pays for the right to use the name, trademark, and business and production methods of the franchisor.

The contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties in detail.

People who risk their time, money, and other resources to start and manage a business.

A deep-seated sense that the individual is personally responsible for what happens in his or her life.

A deep-seated sense that forces other than the individual are responsible for what happens in his or her life.

Small segment of a market with fewer competitors than the market as a whole. Market niches tend to be quite attractive to small firms.

An agency of the federal government designed to maintain and strengthen the nation’s economy by aiding, counseling, assisting and protecting the interests of small businesses.

Local offices-affiliated with the Small Business Administration-that provide comprehensive management assistance to current and prospective small business owners.

An organization-affiliated with the Small Business Administration-that provide comprehensive management assistance to current and prospective small business owners from qualified volunteers.

Individuals who invest in start-up companies with high growth potential in exchange for a share of ownership.

A system for recognizing, recording, organizing, analyzing, summarizing, and reporting information about the financial transactions that affect an organization.

Accountants who work within a business organization, preparing reports and analyzing financial information for the company that employs them.

Accountants who provide accounting services for clients on a fee basis.

The branch of accounting that prepares financial statements for use by owners, creditors, suppliers, and other external stakeholders.

A set of accounting standards that are used in the preparation of financial statements.

The private board that establishes the generally accepted accounting principles used in the practice of financial accounting.

The private self-regulating board that establishes and enforces the generally accepted accounting principles used in the practice of financial accounting.

A financial statement that reports the financial position of a firm at a particular point in time by identifying and reporting the value of the firm’s assets, liabilities, and owners’ equity.

Assets = Liabilities + Owners’ Equity. This states that the value of a firm’s assets is equal to the financing provided by creditors and owners for the purchase of those assets.

Resources owned by a firm.

Claims that outsiders have against a firm’s assets.

The claims a firm’s owners have against their company’s assets.

The financial statement that reports the revenues, expenses, and net income that resulted from a firm’s operations over an accounting period.

Increases in a firm’s assets that result from the sale of goods, provision of services, or other activities intended to earn income.

Resources that are used up as the result of business operations.

The difference between the revenue a firm earns and the expenses it incurs in a given period.

The method of accounting that recognizes revenue when it is earned and matches expenses to the revenues they helped produce.

A law that includes several provisions designed to improve external auditing procedures and improve financial reporting for publicly traded firms.

Analysis of financial statements that compares account values reported on these statements over a period of years to identify changes and trends.

Analysis of information in financial statements that involves expressing various accounts as a percentage of some base amount.

A technique for analyzing information in financial statements that involves expressing account values as ratios of other account values.

The branch of accounting that provides reports and analysis to managers to help them make informed business decisions.

A technique used by managerial accountants to assign product costs based on links between activities that drive costs and production of specific products.

An evaluation and comparison of the financial impact different alternatives would have in a particular decision-making situation.

A management tool that explicitly shows how firms will acquire and use the resources needed to achieve its goals over a specific time period.

The budget documents that communicate an organization’s sales and production goals and the resources needed to achieve these goals.

The budget documents that identify the cash and other financial resources the firm will acquire and use to finance its operations and make planned investments in fixed assets.

A combined statement of an organization’s operational and financial budgets that represents the firm’s overall plan of action for a specified time period.

Any Activity that provides goods and services in an effort to earn a profit.

The study of the choices that people, companies, and governments make in allocating society's resources.

An economic systemp-also known as the private enterprise or free market system-based on private ownership, economic freedom, and fair competition.