Small business final

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Spaced Repetition

spaced repetition

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53 Terms
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Used for status symbol items

Premium pricing

Used for non-status symbol items, pricing your company's product higher than your immediate competition

the primary method of ensuring honesty in employees. Separation of duties. most important for intangible assets. Cash is stolen using false disbursements. Secure valuable property, lock it up.

internal control contract

Contract with key employees to avoid them competing against you.

Include provisions to:

  • Limit their ability to go into competition.

  • Contain their promise not to disclose sensitive or secret information.

  • Offer rewards for adequate termination notice and a smooth transition.

A type of waiver in which a party agrees to hold another party responsible for certain events. In other words, one party is giving up legal rights to sue or otherwise enforce his or her rights.

have a lawyer take charge when signing a waiver!

  • To facilitate exchanges of unlike assets, such as your labor for a grocer’s

  • To measure the value of things, both tangible and intangible

  • To keep track of wealth

Charges the highest price the market will bear

Only works if you are the first product or service of your type in the market, and only if it’s something people really want.

Not a longterm strategy

Refers to employees’ beliefs about the promises between the employee and the firm.

These beliefs are based on the perception that promises have been made (e.g., competitive wages, promotional opportunities, job training) in exchange for certain employee obligations such as giving of their energy, time, and technical skills.

  • Unlimited personal liability, single taxation of income

  • Owner Control

  • The company ends with the death of the owner

  • Raising capital is dependent on assets and credit of owner

  • No government permission is required.

  • Advantage is ease of set up and few legal costs

  • Disadvantage is the owner’s personally responsibility. The owner’s home, stocks, savings, and personal property could be used to pay damages.

Financial accounting

formal, rule-based accounting principles.

Managerial accounting

intended for planning, directing, and controlling a business.

no formal rules. future focused

Tax accounting

based on governmental requirements.

final product: returns, forms, schedules

avoid penalties for noncompliance

charges a base price plus extra for all components

ex: computer + increased storage + printer/scanner + DVD/CD player

sells a base system at a low cost then sets a high price for expendables

ex: printers are relatively low price and ink cartridges are pricey (3-4 carts = price of printer)

A method for planning operations necessary to attain a specific profit goal.

1 type is Break-even analysis

Budget Cycle Process

Schedule and the process for setting the schedule for making purchases by an individual or an organization

uses small-claims court or the regular court to settle differences. The only guaranteed winners are the attorneys. Good attorneys keep their clients out of court. Large companies weather expensive _____ better than small firms. Beware any attorney guaranteeing a certain outcome.

just means a price ending with a 9, 7, or 5 bc customers dont like multiples of 10

Also called dishonesty bonds, repay employers for losses caused by dishonest or negligent employees. Cover losses from employee fraud, theft, forgery, and embezzlement. Purchased only for the employer’s benefit.

A dispute resolution held instead of court cases in which both sides present their case to a neutral 3rd party who is not a judge. Decisions are not binding on the 2 parties.

Markup pricing

A price-setting method where an amount is added to the cost of a product to set the retail price and provide a profit. Likely the most widely used pricing method- knowing your costs and the markup is a fundamental pricing concept.

Setting price above comp to indicate high quality. used for status symbol items ex: Rolex

Planning docs for the future business activities that are formatted to look like common financial statements of the IS, BS, and CF. forecasted for future periods