CGCM Financial Management - Study
Guide (Answered) 100% Correct.
2024/2024.
Accelerated Depreciation
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
The value of goods and services acquired for which payment has not yet been made.
Accounts Receivable
The value of goods shipped or services provided for which payment has not yet been received.
Acid Test Ratio
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)
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
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)
The rate of interest paid for a loan after compounding is considered.
Assets
An accounting/financial term representing the resources owned by a company (tangible or
intangible).
Average Pricing
A pricing approach using average cost as a basis to set price.
Balance Sheet
A financial statement showing a firm's assets, liabilities and equity capital.
, Capital
All the possessions of a business which are devoted to the earning of income.
Capital Budgeting
Actions relating to the planning and financing of capital outlays for such purposes as the purchase of
new equipment.
Capital Expenditure
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
The net flow of dollars into or out of a project.
Cash Method of Accounting
Accounting method by which revenue and expenses are recognized when cash is received or
payment is made.
Compound Interest
Interest that is periodically added to the amount of investment (or loan) so that subsequent interest
is based on the cumulative amount.
Cost Analysis
A review and evaluation of actual or anticipated cost data.
Credit Period
The time allowed a customer to pay an invoice in full.
Credit
That which is owed.
Current Assets
Working capital which includes cash, accounts receivable and inventories
Current Liabilities
The debts/obligations owed and expected to be paid within 12 months.
Debt
An amount owed to creditors
Debt Ratio
Ratio indicates what proportion of debt a company has relative to its assets
Depreciation
The decline in value, according to the book value of the asset, over a specific period of time.
Depreciation expense generally occurs when the asset is placed in service.
Guide (Answered) 100% Correct.
2024/2024.
Accelerated Depreciation
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
The value of goods and services acquired for which payment has not yet been made.
Accounts Receivable
The value of goods shipped or services provided for which payment has not yet been received.
Acid Test Ratio
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)
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
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)
The rate of interest paid for a loan after compounding is considered.
Assets
An accounting/financial term representing the resources owned by a company (tangible or
intangible).
Average Pricing
A pricing approach using average cost as a basis to set price.
Balance Sheet
A financial statement showing a firm's assets, liabilities and equity capital.
, Capital
All the possessions of a business which are devoted to the earning of income.
Capital Budgeting
Actions relating to the planning and financing of capital outlays for such purposes as the purchase of
new equipment.
Capital Expenditure
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
The net flow of dollars into or out of a project.
Cash Method of Accounting
Accounting method by which revenue and expenses are recognized when cash is received or
payment is made.
Compound Interest
Interest that is periodically added to the amount of investment (or loan) so that subsequent interest
is based on the cumulative amount.
Cost Analysis
A review and evaluation of actual or anticipated cost data.
Credit Period
The time allowed a customer to pay an invoice in full.
Credit
That which is owed.
Current Assets
Working capital which includes cash, accounts receivable and inventories
Current Liabilities
The debts/obligations owed and expected to be paid within 12 months.
Debt
An amount owed to creditors
Debt Ratio
Ratio indicates what proportion of debt a company has relative to its assets
Depreciation
The decline in value, according to the book value of the asset, over a specific period of time.
Depreciation expense generally occurs when the asset is placed in service.
