FBLA --> Intro to Financial Math 3

Savings Account

Savings Account

A specific account that earns interest. Compared to a checking account, it is not intended for daily use, rather for funds to accumulate for future use. It earns more interest. Checking accounts and savings accounts can be linked, so over overdraw or overdraft will be avoided if checking account were to be depleted. Limited withdrawals

Business checks are valid for how long?

6 months

Income statement

A statement that shows in detail a business's income and operating expenses, also called a profit-and -loss statement. Shows gross profit, net sales, cost of goods sold, net income...,

Mutual fund

A kind of investment offered by an investment company, which accumulates the saving of many individuals and invests them in a portfolio of stocks, bonds, or both. A fund manager (or "portfolio manager") decides how to invest the money, and for this he is paid a fee, which comes from the money in the fund.

Compound interest/Computation

Interest earned not only on the original principal but also on the interest earned during previous interest periods, earning interest on interest. Use equation A=P(1 + r/(number of periods per year) )^(# of years x # of periods per year)

Installation Loan

Loan paid off in monthly equal payments. Formula for monthly equal payments:

Stock

Share of ownership in a corporation/business. You invest money into a corporation and own shares of a company. Owning a part of company = equity = stake. As value of a company increases, the "piece of a pie" becomes bigger and more delicious

Share

Unit in a company. "Parts" that people own. As value of company increases over time, the worth of a share increases and vice versa.

Conversion of euro to dollar

1 euro = 1.07 dollar

Dividend

Money you earn as a shareholder of the company

Net Asset Value

Worth of a share of a mutual fund, total market value/number of shares outstanding

Loading charge

A fee paid to an investment company either when purchasing shares of a mutual fund or when selling shares, based on a percent of the amount invested. Type "A" mutual funds are front-loaded and make the charge when you buy the fund. Type "B" mutual funds are back-loaded and make charge when you sell

Bonds

Written pledge that you will be repaid your specified amount of money plus interest, no ownership in corporation. One form is royalty. You get your money back when the bond reaches its maturity date. Interest is paid every 6 months.

Liquidation

In finance and economics, liquidation is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations as and when they come due. Liquidation is the process of bringing a business to an end and distributing its assets to claimants.

When you record the number of hours you work, if you don't work an entire hour, you should round to the nearest

quarter hour

Flat

Tax rate that does not change with respect to an employee's income level

Property damage coverage

Provides financial protection against damage to one's home and personal property from fire, windstorm, rain, lightening, and other unpredictable events

Comprehensive insurance

Pays for damage to the insured vehicle from losses due to fire, vandalism, theft, and just about any cause other than a collision

Collision insurance

Pays for damage to the insured vehicle caused by a collision with another motor vehicle or an object such as a telephone pole

Bodily Injure Liability Coverage

Helps pay for another person's physical injury as a result of an accident for which you are liable. It can cover physical injury, pain and suffering, and losses incurred by third parties due to the accident.

Cost of goods sold

The value of the beginning inventory plus the cost of any goods received, minus the value of the ending inventory. The accumulated total of all costs used to create a product or service, which has been sold. These costs fall into the general sub-categories of direct labor, materials, and overhead.

Celsius to Fahrenheit

F = (9/5)C + 32

One hectare = how many acres?

2.47 acres

1 byte

8 bits

FIFO (First in First Out)

The first you purchased is the first out. Example: I buy three books: Book 1 = $1, Book 2 = $2, Book 3 = $3. I resell them. Book 1 is the first to leave. The ending inventory is the sum of Book 2 and Book 3

LIFO (Last in First Out)

The last you purchased is the first out. Example: I buy three books: Book 1 = $1, Book 2 = $2, Book 3 = $3. I resell them. Book 3 is the first to leave. The ending inventory is the sum of Book 1 and Book 2

Annual Yield (Stock)

Annual dividend per share / cost per share

Annual Yield (bond)

Bond Cost: Face Value x Percent (quoted price)

Annual Interest

Face Value x Interest Rate

Annual Yield

: Annual Interest/Bond Cost

Federal income tax return/ 1040

Reconcile/calculate your income tax and compare with the taxes were already withheld. Overpaid, gov pays/refunds you back. Underpaid, you pay the gov, make up additional tax to gov, penalty may be assessed

State income tax

7 states DON'T HAVE income taxes - Washington, Nevada, Texas, Florida, Alaska, Wyoming, and South Dakota. Tennessee and New Hampshire only tax on investment income but not on earned income

Earned income

Income generated by actually going to work

Passive income

Income from investment such as capital gain, dividend, and interest

Capital Gain

Appreciation of investments. Applies to houses, stocks, collection of coins, cars. Ex: Buy a stock at $10 and sell at $12. Capital gain is $2, the difference

Capital Loss

Opposite of capital gain. Loss can offset gain. Ex: Stock A, one share goes from 10 to 15, and Stock B goes from 12 to 9. The net gain is $2, if I sell both of them. Tax is charged on the net gain ($2 in this case). If net gain is negative, $3000 from the loss can be used to offset other incomes in the same year. If more than $3000, then the extra loss can be carried forward to next year.

Purchase Order

PO. Purhcase contract that lists the description of merchandise, the price, and shipping instructions. Difference between invoice is that invoice is the actual bill, the actual amount you owe/need to pay

Maintained Markup

(Original retail - reductions) - Cost of Goods sold

Mills

1/1000 US Dollar

Owner's Equity

Assets - Liabilities. Also called net worth/capital

Reward

Some credit cards do this to entice. Ex: 2% reward, give you back 2% of your purchase back to you

Debit Card

Directly linked to your bank account. No credit line. Passcode protected. Different from gift card in that it cannot be replenished.

Cash advance

From using credit card, go to ATM and use code and to get cash. High interest is charged though

Net amount of sale (Net proceeds)

On the day of sale, how much cash is generated by sales. Do not regard how much it costs

Nominal account

The balance in a nominal account is closed at the end of the accounting year. As a result a nominal account begins each accounting year with a zero balance. Since the balance does not carry forward to the next accounting year, a nominal account is also referred to as a temporary account.

Bank Fractional Number

The first part of the hyphenated numerator in a bank fractional routing number stands for the city/state, notes BankersOnline.com. The second part of the numerator represents the American Bankers Association institution identifier, and the denominator is the Federal Reserve routing symbol