The BASK sorts business vocabulary into two headings, and the exam asks you which heading a term sits under as often as it asks what the term means.
Financial analysis terms for assessing business health
Balance sheets, budgets, cash flow statements, profit and loss statements, overhead, cash flow, cash reserves, ROI, SWOT analysis, sales pipeline and market position.
Note the two surprises: SWOT sits here, and so does ROI. "Strategic alignment techniques" is not a BASK key-concept heading at all.
Business terms
Competitive advantage, profit and loss, revenue, financial projections, quality, service level agreements, strategic plans, fixed and variable costs, supply and demand, net income and KPIs.
The pairing that gets tested is fixed and variable costs together with key performance indicators. Distractor pairs come from other competencies: data cleansing and data mining are Analytical Aptitude data analysis techniques; awareness and desire are the first two ADKAR elements; content and construct validity come from the Uniform Guidelines.
Cost behavior
- Variable cost: rises and falls with units produced. Raw materials and hourly production wages.
- Fixed cost: does not change with output in the short run. Rent, insurance and salaried supervision.
- Overhead is a financial analysis term for ongoing operating expense, not the label for volume-driven cost. Cash reserve is held funds.
A budget request that lists rent, insurance and salaried supervision separately from materials and hourly wages is illustrating fixed versus variable costs - not overhead versus cash reserves, not revenue versus net income.
The three statements
- Balance sheet: assets, liabilities and equity at a point in time.
- Profit and loss statement: revenue and expense over a period.
- Cash flow statement: cash movement over a period.
- Budget: a plan, not a statement of position.
Carry this in: "assets, liabilities and owner's equity at a point in time" is always the balance sheet. Period-based flows are the P&L and cash flow statement.