Test #1 Missed PIs

The 17 missed PI's for first DECA finance test.

PD:126 — Explain the Need for Innovation Skills

Innovation involves creating and implementing new ideas that provide value. Essential skills include creativity, problem-solving, critical thinking, adaptability, and collaboration, which help individuals remain competitive, meet changing customer needs, improve offerings, adapt to change, and cultivate growth.

EC:006 — Describe the Functions of Prices in Markets

• Price: The amount of money charged for a product or service.

Functions of prices in markets

• Allocate resources – Direct resources to where they are most valued.

• Influence buying and selling – Affect consumer demand and producer supply.

• Signal market conditions – Indicate shortages, surpluses, and changes in demand.

• Generate revenue – Provide income for businesses.

• Determine value – Reflect what buyers are willing to pay and sellers are willing to accept.

Factors affecting prices

• Supply and demand

• Competition

• Production costs

• Consumer demand

Key DECA terms

• Market equilibrium – The point where supply equals demand.

• Scarcity – Limited availability of resources or products.

• Surplus – Supply exceeds demand.

• Shortage – Demand exceeds supply.

• Resource allocation – Distribution of resources to produce goods and services.

OP:519 — Plan Project

• Project: A temporary activity undertaken to achieve a specific goal or produce a unique result.

• Project planning: The process of determining how a project will be completed by organizing tasks, resources, and time.

Steps in planning a project

• Define objectives – Establish the project's goal and expected results.

• Identify tasks – Determine the activities required to complete the project.

• Sequence tasks – Put activities in the proper order.

• Assign resources – Determine the people, budget, materials, and equipment needed.

• Develop a timeline – Set deadlines and milestones for completion.

• Identify potential risks – Anticipate obstacles and prepare solutions.

Why project planning is important

• Provides direction and organization.

• Promotes efficient use of resources.

• Helps control time and costs.

• Reduces risks and delays.

• Increases the likelihood of meeting project objectives.

EI:092 — Develop Tolerance for Ambiguity

• Definition: - Tolerance for ambiguity: The ability to make effective decisions in uncertain or changing situations.

  How to develop tolerance for ambiguity

  • Stay flexible – Adapt to change.

  • Be open-minded – Consider new ideas.

  • Gather information – Use available facts for decisions.

  • Manage uncertainty – Remain productive in ambiguity.

  • Learn from experience – Adjust based on feedback.

  Importance

  • Adapts to change.

  • Improves decision-making in uncertainty.

  • Encourages innovation.

  • Reduces stress in unknown situations.

  • Supports success in dynamic environments.

EC:010 — Identify Factors Affecting a Business's Profit

• Profit: The money remaining after all business expenses are subtracted from revenue.

Factors affecting profit

• Revenue – Higher sales generally increase profit.

• Expenses – Higher costs reduce profit.

• Pricing – Prices affect sales volume and revenue.

• Supply and demand – Influence sales and pricing.

• Competition – Can affect prices, sales, and market share.

• Economic conditions – Changes in the economy affect consumer spending.

Why understanding profit is important

• Helps make better business decisions.

• Supports financial stability and growth.

• Identifies ways to increase revenue or reduce costs.

• Measures business performance.

Key DECA terms

• Revenue – Money earned from sales.

• Expenses – Costs incurred to operate the business.

• Fixed costs – Costs that remain the same regardless of sales.

• Variable costs – Costs that change with production or sales.

• Net profit – The amount remaining after all expenses are deducted from revenue.

FI:058 — Explain Forms of Financial Exchange

• Financial exchange: The transfer of money in return for goods or services.

Forms of financial exchange

• Cash – Physical currency used for immediate payment.

• Credit – Borrowed money that is repaid later, often with interest.

• Debit – Payment made directly from a checking account.

• Electronic Funds Transfer (EFT) – Electronic movement of money between accounts.

• Check – A written order directing a bank to pay a specific amount.

• Mobile/Digital payment – Electronic payment made using a smartphone or digital wallet.

Why different forms are used

• Provide convenience.

• Increase payment speed.

• Improve security.

• Meet different consumer and business needs.

Key DECA terms

• Interest – The cost of borrowing money.

• Transaction – The exchange of money for goods or services.

• Authorization – Approval of an electronic payment before it is processed.

• Available balance – The amount of money that can be spent from an account.

• Processing – The steps required to complete and record a payment.

CO:114 — Handle Phone Calls in a Businesslike Manner

• Business phone etiquette: Using professional communication skills when making or receiving business calls.

Guidelines for handling business phone calls

• Answer promptly – Greet the caller professionally and identify yourself or the business.

• Speak clearly and courteously – Use a respectful, professional tone.

• Listen actively – Pay attention and avoid interrupting.

• Take accurate messages – Record the caller's name, contact information, and purpose of the call.

• End professionally – Confirm any next steps and thank the caller.

Why it is important

• Creates a positive business image.

• Builds customer relationships.

• Reduces miscommunication.

• Improves customer service.

Key DECA terms

• Active listening – Fully focusing on and understanding the caller.

• Professionalism – Demonstrating appropriate business behavior.

• Courtesy – Showing respect and consideration for others.

• Telephone etiquette – Accepted standards for professional phone communication.

• Message accuracy – Recording complete and correct information.

EC:002 — Distinguish Between Economic Goods and Services

• Economic goods: Tangible items that satisfy wants and have monetary value.

• Services: Intangible activities performed for consumers that provide value or satisfaction.

Differences between goods and services

• Goods are tangible; services are intangible.

• Goods can be owned; services are experienced or used.

• Goods can often be stored or inventoried; services generally cannot be stored.

• Both are produced to satisfy consumer wants and needs.

Why understanding the difference is important

• Helps businesses determine what they offer.

• Affects marketing, production, and distribution decisions.

• Helps identify how value is delivered to customers.

Key DECA terms

• Tangible – Able to be seen or touched.

• Intangible – Cannot be physically touched.

• Utility – The ability of a good or service to satisfy wants or needs.

• Consumer demand – The desire and ability of consumers to buy goods or services.

• Economic value – The worth consumers place on a good or service.

FI:354 — Explain the Role of Finance in Business

• Finance: The management of a business's money and financial resources to achieve its goals.

Roles of finance in business

• Acquire capital – Obtain funds to start and grow the business.

• Manage cash flow – Ensure enough cash is available for daily operations.

• Support decision-making – Evaluate financial information before making business decisions.

• Control costs – Monitor expenses to improve profitability.

• Plan for growth – Budget and invest resources for future expansion.

Why finance is important

• Maintains business operations.

• Supports profitability and growth.

• Improves financial stability.

• Helps achieve business objectives.

Key DECA terms

• Capital – Financial resources used to operate or expand a business.

• Liquidity – The ability to meet short-term financial obligations.

• Solvency – The ability to meet long-term financial obligations.

• Working capital – Current assets minus current liabilities; funds available for day-to-day operations.

• Capital budgeting – The process of evaluating long-term investment opportunities.

• Financial leverage – Using borrowed funds to finance business activities.

• Return on investment (ROI) – A measure of the profitability of an investment.

EI:008 — Use Appropriate Assertiveness

• Assertiveness: Communicating confidently, respectfully, and directly while considering the rights and opinions of others.

How to use appropriate assertiveness

• Express ideas clearly – State opinions and needs confidently.

• Respect others – Listen to and consider different viewpoints.

• Set boundaries – Address concerns or say no professionally.

• Remain composed – Stay calm and respectful during disagreements.

• Seek win-win solutions – Resolve conflicts constructively.

Why it is important

• Builds positive professional relationships.

• Improves communication and teamwork.

• Helps resolve conflicts effectively.

• Increases confidence and credibility.

OP:013 — Explain Routine Security Precautions

• Routine security precautions: Everyday practices used to protect people, property, information, and business assets from loss or harm.

Routine security precautions

• Control access – Restrict entry to authorized individuals.

• Protect confidential information – Secure customer and business data.

• Secure cash and valuables – Follow proper cash-handling and storage procedures.

• Use passwords properly – Create strong passwords and keep them confidential.

• Report suspicious activity – Notify the appropriate person of potential security threats.

• Follow company security procedures – Adhere to established policies and protocols.

Why it is important

• Protects employees, customers, and assets.

• Reduces the risk of theft, fraud, and data breaches.

• Maintains business continuity.

• Promotes a safe and secure work environment.

Key DECA terms

• Access control – Limiting access to authorized individuals.

• Confidentiality – Protecting sensitive information from unauthorized disclosure.

• Internal controls – Procedures designed to safeguard assets and ensure accurate operations.

• Authentication – Verifying a user's identity before granting access.

• Asset protection – Safeguarding physical and financial business resources.

• Surveillance – Monitoring people or property to deter and detect security threats.

• Security protocol – Established procedures for maintaining business security.

FI:061 — Describe Sources of Income and Compensation

• Income: Money earned from work, investments, or other sources.

• Compensation: The total rewards received in exchange for work, including pay and benefits.

Sources of income and compensation

• Wages – Hourly pay for work performed.

• Salary – Fixed annual compensation.

• Commission – Earnings based on sales performance.

• Bonuses – Additional pay for meeting performance goals.

• Benefits – Non-wage compensation (e.g., insurance, retirement plans, paid leave).

• Investment income – Earnings from dividends, interest, or capital gains.

Why it is important

• Helps evaluate employment opportunities.

• Supports personal financial planning.

• Encourages career and compensation decisions.

• Identifies the total value of a compensation package.

Key DECA terms

• Gross income – Earnings before taxes and deductions.

• Net income – Earnings after taxes and deductions.

• Employee benefits – Non-cash compensation provided by an employer.

• Variable compensation – Pay that changes based on performance or results.

• Incentive pay – Compensation designed to motivate performance.

• Deferred compensation – Earnings paid at a future date, often as a retirement benefit.

• Capital gains – Profit earned from selling an investment for more than its purchase price.

NF:124 — Demonstrate Advanced Database Applications

• Database: An organized collection of data that can be stored, managed, and retrieved electronically.

Advanced database applications

• Create queries – Retrieve and analyze specific data.

• Generate reports – Organize and summarize information.

• Use forms – Enter, edit, and manage records efficiently.

• Sort and filter data – Display information based on specific criteria.

• Maintain data integrity – Ensure data is accurate, complete, and consistent.

• Manage relationships – Link related data across multiple tables.

Why it is important

• Improves data organization and accuracy.

• Supports business decision-making.

• Increases efficiency and productivity.

• Makes data retrieval and analysis easier.

Key DECA terms

• Primary key – A field that uniquely identifies each record.

• Foreign key – A field that links related tables.

• Relational database – A database that stores related data in multiple tables.

• Query – A request to retrieve or analyze specific data.

• Normalization – Organizing data to reduce redundancy and improve efficiency.

• Data integrity – The accuracy, consistency, and reliability of stored data.

• Schema – The overall structure and organization of a database.

FI:573 — Discuss the Nature of Convergence/Consolidation in the Finance Industry

• Convergence: The combining of different financial services (e.g., banking, insurance, investments) into a single organization.

• Consolidation: The merging or acquisition of financial institutions to form larger organizations.

Effects of convergence and consolidation

• Expand services – Offer multiple financial products through one provider.

• Increase efficiency – Reduce operating costs through shared resources.

• Strengthen competitiveness – Compete more effectively in the financial marketplace.

• Increase market share – Reach more customers through larger operations.

• Improve convenience – Give customers access to a wider range of financial services.

Why it is important

• Changes how financial institutions compete.

• Affects consumer choices and access to services.

• Creates opportunities for growth and economies of scale.

• Increases the need for regulatory oversight.

Key DECA terms

• Merger – The combination of two companies into one.

• Acquisition – One company purchases another.

• Diversification – Expanding products or services to reduce risk.

• Economies of scale – Cost advantages gained from operating at a larger scale.

• Cross-selling – Selling additional financial products to existing customers.

• Financial intermediary – An institution that facilitates the flow of funds between savers and borrowers.

• Market concentration – A market in which a small number of firms control a large share of the industry.

• Universal bank – A financial institution offering commercial banking, investment banking, and other financial services.

• Financial holding company – A company that owns and controls multiple types of financial institutions.

• Bancassurance – The sale of insurance products through a bank.

BL:134 — Discuss the Effect of Tax Laws and Regulations on Financial Transactions

• Tax laws and regulations: Government rules that determine how financial transactions are taxed and reported.

Effects of tax laws on financial transactions

• Determine tax liability – Specify how much tax is owed on a transaction.

• Influence financial decisions – Affect spending, investing, and business activities.

• Require compliance – Businesses and individuals must follow tax laws and reporting requirements.

• Affect transaction costs – Taxes can increase the overall cost of a purchase or investment.

• Generate government revenue – Taxes fund public programs and services.

Why it is important

• Ensures legal compliance.

• Helps avoid penalties and fines.

• Supports accurate financial planning.

• Influences business and investment decisions.

Key DECA terms

• Tax liability – The total amount of tax owed.

• Taxable income – Income subject to taxation.

• Capital gains tax – Tax on the profit from the sale of an asset.

• Sales tax – Tax imposed on the sale of goods and certain services.

• Tax deduction – An expense that reduces taxable income.

• Tax credit – A direct reduction of taxes owed.

• Withholding – Taxes deducted from income before payment.

• Compliance – Following applicable tax laws and regulations.

• Exemption – Income, property, or transactions excluded from taxation.

• Depreciation – The allocation of an asset's cost over its useful life for tax and accounting purposes.

FM:003 — Explain the Role of Ethics in Financial-Information Management

• Financial-information management: The process of collecting, recording, maintaining, and reporting financial information.

• Ethics: Standards of right and wrong that guide business decisions and behavior.

Role of ethics in financial-information management

• Ensure accuracy – Record and report financial information truthfully.

• Maintain confidentiality – Protect sensitive financial information.

• Promote transparency – Provide honest and complete financial reporting.

• Prevent fraud – Avoid intentional misrepresentation or misuse of financial data.

• Support compliance – Follow accounting standards, laws, and regulations.

Why it is important

• Builds trust and credibility.

• Protects stakeholders.

• Supports sound financial decision-making.

• Reduces legal and financial risk.

Key DECA terms

• Financial stewardship – The ethical and responsible management of financial resources.

• Integrity – Adhering to ethical principles and honesty.

• Fiduciary responsibility – The duty to act in the best financial interests of others.

• Material misstatement – An error or omission that could influence financial decisions.

• Internal controls – Procedures that safeguard assets and ensure accurate reporting.

• Conflict of interest – A situation where personal interests may influence professional judgment.

• Financial disclosure – Providing required financial information to stakeholders.

• Confidentiality – Protecting sensitive financial information from unauthorized access.

• Audit trail – A documented record that traces financial transactions from beginning to end.

FI:663 — Discuss the Nature of Cost Allocatio

• Cost allocation: The process of assigning costs to products, services, departments, or projects based on their use of resources.

Purpose of cost allocation

• Determine true costs – Identify the total cost of producing goods or services.

• Support pricing decisions – Set prices that cover costs and generate profit.

• Measure performance – Evaluate departmental or project efficiency.

• Improve budgeting – Plan and control future expenses.

• Support financial reporting – Assign costs accurately for accounting purposes.

Why it is important

• Improves cost control.

• Supports better decision-making.

• Promotes accurate financial reporting.

• Helps allocate resources efficiently.

Key DECA terms

• Direct costs – Costs that can be traced directly to a product or service.

• Indirect costs (overhead) – Costs that cannot be directly traced to a single product or service.

• Cost driver – A factor that causes or influences a cost.

• Activity-based costing (ABC) – Allocating overhead based on activities that consume resources.

• Cost center – A department or unit that incurs costs but does not directly generate revenue.

• Overhead allocation – Distributing indirect costs among departments, products, or services.

• Absorption costing – Assigning all manufacturing costs to products.

• Allocation base – The measure used to distribute indirect costs (e.g., labor hours, machine hours).