Financial Management

• What is the process of laboratory management?

  Planning, forecasting, controlling, and monitoring finances
• According to Henry Mintzberg, what are the roles of leaders?

  Spokesperson, budgetary, resource allocator, figurehead
• What is the purpose of a planning document in budgeting?

  To forecast the relationship between funds and expenses
• What is another name for a budget plan?

  Budget proposal
• How does budgeting relate to an organization's strategic plans?

  It turns strategic plans into daily operations
• What are the two approaches in budgeting?

  • Centralized: fully controlled by the leader
  • Decentralized: participation of lower levels
• What are the types of budgets?

  • Fix-ceiling Budget: uppermost spending limits
  • Open-ended Budget: no specific amount declared
  • Flexible Budget: declared amount with adjustments
  • Sunset Budget: zero-based budget before fiscal year end
  • Contingency Budget: used during emergencies
• What is a fix-ceiling budget?

  Uppermost spending limits set by the organization
• Why is an open-ended budget considered dangerous?

  It has no specific amount declared
• What is a flexible budget?

  A budget with a declared amount that can adjust
• What is a sunset budget?

  A zero-based budget submitted before fiscal year end
• What is a contingency budget used for?

  Used during emergencies
• What does budgeting help prevent in an organization?

  Running into a financial ditch
• How often are budgets typically written?

  Usually a year in advance
• What are the stages of operational budget preparation?

  1. Time Frame: main working guideline
  2. Forecasting Stage: projecting expenses and profits
  3. Scheduling Stage: when and where the budget will go
  4. Synthesis of Information: organizing financial information
• What is the purpose of cost accounting?

  To provide managers with operational information
• What is managerial accounting?

  Another name for cost accounting
• What is the important determinant in forecasting staffing needs?

  The projected volume of work
• How do you calculate labor cost?

  $\text{Labor cost} =$$\text{no. of working days} \times \text{daily pay rate} \times \text{no. of workers}$
• What is the labor cost for 22 working days, a daily pay rate of 1,000 pesos, and 20 workers?

  $440,000 \text{ pesos}$
• What is the primary task of the accounting process?

  Providing financial information
• What types of information does an effective accounting system provide managers?

  • Internal reporting for current operations
  • Internal reporting for strategic planning
  • External reporting to stockholders and government
• What are the types of organizations for accounting and tax purposes?

  • Nonprofit organization (NPO)
  • Not-for-profit organization (NFPO)
  • For-profit organization
• What is a nonprofit organization (NPO)?

  An organization serving society and benefiting the public
• How does an NPO use its profits?

  To advance the organization, not for profit
• What is a not-for-profit organization (NFPO)?

  An organization that funnels profits back into operations
• What is the primary focus of a for-profit organization?

  To provide products or services for profit
• What are the two broad categories of accounting?

  • Financial accounting
  • Cost accounting
• What is the primary function of financial accounting?

  To record the bottom-line financial position
• What is the primary objective of cost accounting?

  To provide operational information to managers
• What does the accounting equation state?

  Assets = Liabilities + Equity
• What does a balance sheet report?

  Assets, liabilities, and equities at a specific time
• What are assets in a business context?

  Resources used to conduct business operations
• How are assets consumed in a business?

  In day-to-day operations
• What are liabilities?

  Bills owed or obligations of the enterprise
• What is stockholder equity?

  The remaining value of the company
• What is the golden rule in accounting?

  Assets = Liabilities + Equity
• What are the two standard techniques for recording financial activity?

  • Cash basis
  • Accrual basis
• What is the cash basis method?

  Records revenue when cash is received
• What is the accrual basis method?

  Matches expenses against revenue for net income