Finals

study guide

What is the diffrence between a W2 and a W4 form

W-4 is filled put when when somebody has accepted a new job . a W 2 is filled out by and employeera t th nd of each year.

Form 1040

Used by u.s taxpayers to fill out a fomr for annual income tax.

W 2 form

showing the amount of income you’ve earned from your employeer.

W4 form (employee)

determines how much you should be withheld from your paycheck for income taxes.

adjusted gross income (AGI)

retiremnt ditributions, dividends, and capital gains.

tax exempt

any income that is free from being taxed of. At the state, local, or federal level.

sales tax

taxes on goods and services

income tax return

a documented fie that reports your expenses and other related financial information.

profit

financial benifit whne revenue is granted from taxes or expenses.

preffered stock

a type of stock that gives the onwer the advantage of receving cash dividends before common stockholders.

investment liquidity

the ability to buy or sell an investment quikcly without substantily ruducing its value.

equity capital

funds paid into a into a bussiness by investors in exchange for a commonstokc or preffered

diversication

the process of spread your assets among several diff types of investments to redice risk

dividends

distributions of money, stock or other property tjat a corp pays to stoclholders

corp bond

a corporatoins written pledge to repay a specific amoint of money along with intrest

common stock

a unit of a shore of a company

colectibles

something of value by collectors

capital gain

profit from an investment or sale of a property

what are the advantages of renting vs buying a home?

1. tax advantages

2. long term investment if the home value increases

what does it mean to pay points?

it means to pay the extra charged in order to earna low intrest rate.

title insurance

prevents issues with claiming your home title.

tenant

a person who pays for the right to live in a residence onwed by somebody else.

multi unit dwellings

a building containing of multiple complexes. also has all the essental facilities.

mortgage

if you fail to pay the rent you are agreeing to have your property take away

mobility

to ability to move from one place to another

mobile home

portable trailer used as a single person accomidation

home equity loan

the intrest stays the same throughout the whole term

net income

the money you take home **after** taxes and is deducted from your paycheck.

asset

any item of value

an example of an asset

owning property.

insolvency

liabilites are higher than assets

an example of insolvency

buying an expensive car and getting into a car accident leading to financial distress.

fixed expense

stays the same.

variable expense

constantly changing

comsumer price index

variation in prices paid by typical consumers for retail goods and other items.

opportunity cost

the best alternitive to make a financial decision

cash outflow

all of the money that you spend

budget surplus

setting a budget with having enough money to spend more than your budget is set to.

liability

something you are using an are supposed to pay back.

provide 1 example of a liability

bills that must be paid for, mortages, student loans.

provide 1 example of a asset

cash or houses.

provide 1 example of a fixed expense

salary, utility bills, and rent.

provide 1 example of a variable expense.

store prices.

provide 1 example of cashoutflow

leasing automobile fees, bank loans, salary given out to emplyees.

automatic payment

your bank will atumaticaly withdraw the money from your account.

automatic teller machine

a computer terminal that allows withdrawl of cash from your account.

bank reconciliation

a report for the diffrence between the bank statement and the checkbook balance.

Certificate of Deposit (CD)

a savings alternative when money is left on deposit for a certain period of time. to earn a specific rate of return.

compounding

the process by which interest is earned on both the principal the original amount you deposited and on previously earned interest.

commercial

a **for profit** institution.

what finacial servoces does a commericla bank offer?

full range. checking, savings, and lending.

Who do these banks serve?

indivuduals.

credit card

a substitute for cash or check. required to pay back at each billing cycle.

credit union

non-profit financial institution which is owned by its members and it’s organized for their benefit. Most offer a full range of financial services.

debit card

cash card that allows you to withdrawl money to pay directly from your savings account.

demand deposit

money that can be withdrawn from your account without prior notice.

direct deposit

make deposits directly your account.

electronic banking

ability to use a banking service with internet 24 hours 7 days a week.

Federal Reserve System

the central bank of the United States.

intrest rates

the amount owed

liquidity

ability ot convert into cash.

mutual funds

investment program provided by shareholders. it is professionally managed.

Pawn shops

items typically for people who are lower-class individuals. But, have higher fees.

savings deposits

a bank account

savings and loan associations

financial institution that specializes in savings accounts and mortgage loans.

Do they **now** offer the same services as a commercial bank

yes

time deposit

a deposit in a bank account that cannot be used for withdrawal unless you have the required permission.

U.S Savings Bond

savings alt. the safest financial stratigy

annual intrest rate

the cost you pay each year for borrowing money

APR

cost of credit on a yearly basis expressed as a percentage

capacity

can you repay your loan?

character

will you repay the loan?

capital

what are your assets and net worth?

collateral

what if you do not repay your loan?

Consumer Credit Counciling Service

trained professional money, debt managment, budgeting.

cosigners

if the other person is unable to pay it then you will be responsible for paying.

credit

the ability to purchase goods or services.

credit bureaus

a compnay that collects related information and and makes ot availbes to credit card companies and financial institutions.

credit limit

the max amount of credit a financial institution or lender will extend for a certain line of credit.

creditor

a person or comapany to whom money is owned

credit rate

worthiness on general terms or respect to a financial obligation

debt-repaying plan

a series of steps yo can take to pay off your outstanidng debts.

down payment

used on real estate or cars what you pay upfront when purchasing a service or good.

finance charge

fee for the extension of credit

financing

to provide funding

grace period

the billing cycle and the payment due date

instalment paymemts

paying a bill through small payments

intrest

money paid regularly at a particular rate used for debt repayment or loans

intrest rate

a portion of a loan that is charged as intrest

line of credit

usage of money incase you need funds

trade - off

excahange of something of value

principal

money you agreed to pay back

2 pros of using credit

easier than carrying cash everywhere, able to borrow money

adjustable- rate mortgage

a home loan based upon the market changes over time.

appraisal

a writen document showing how much an property is worth

appraised value

professional judgment

book value

the estimated real estate based upon the Kelley Blue Book

condominiums

a housing conmplex that are seprate and onwed by one individual

deed

officlal document transferring ownership from seller to buyer

escrow account

money set aside for property taxes and homeowners insurance