Finance Career Cluster Exam Vocabulary Review

100 vocabulary flashcards summarizing essential terms, concepts, and examples from the Finance Career Cluster sample exam.

Fixed expenses

Business costs (e.g., rent, insurance, taxes) that do not vary with sales volume.

Two-way communication

Exchange that requires both sharing and mutual understanding between sender and receiver.

Price-earnings (PE) ratio

Stock table metric calculated by dividing a share’s market price by its earnings per share.

Managerial accounting

Internal reporting of financial information to aid managerial decision-making.

Innovative entrepreneurial endeavor

Creating and marketing a new invention or product, not just reselling existing items.

New employee orientation

Program that welcomes hires and communicates the employer’s philosophy and expectations.

Lean methodology

Production approach that eliminates waste and creates more value with fewer resources.

Corporate governance

System of rules and practices that holds companies accountable to high ethical standards.

Profit

Monetary reward a business must earn to survive and justify its risks.

Eye contact

Nonverbal cue conveying confidence and engagement during interactions such as job interviews.

Fraud investigation

Finance-industry task of examining potential financial wrongdoing or deceit.

Customer Relationship Management (CRM)

Technology and strategy that use customer data to improve service and boost revenues.

Positive attitude

Optimistic outlook that focuses on the good and expects favorable outcomes.

Profit-sharing

Compensation plan that distributes a portion of company profits to employees.

Real rate of return

Investment profit adjusted for inflation (and often taxes) to show true purchasing-power gain.

Project

Undertaking with a distinct beginning and end that must be monitored and controlled.

High achiever perception

Individuals with notable accomplishments are often viewed by others as leaders.

Estate tax

Federal tax on the transfer of a deceased person’s assets based on current market value.

Creative communication

Adapting messages and media because people communicate and interpret signals differently.

Complaint reduction

Result of serving customers efficiently, which lowers the number of costly complaints.

Self-confidence

Belief in one’s abilities—essential in the competitive business environment.

Social responsibility

Duty of all businesses to contribute positively to society’s well-being.

Bank credit card

General-purpose card accepted by many affiliated merchants.

Client problem resolution

Best practice of apologizing and fixing issues immediately to retain financial clients.

Security cameras

Surveillance devices used by hotels and other firms to prevent theft.

Financial-information management challenge

Data stored in custom, task-specific software that is hard for others to access or analyze.

Captive insurance company

Organization-owned insurer offering lower premiums and direct control of claims.

Segregation of duties

Internal control that separates responsibilities to limit any one person’s power.

Turnover risk

Likelihood that unhappy employees leave when fairness and respect are lacking.

Recession stock effect

Stock prices tend to fall because profits are expected to drop during economic downturns.

Complaint handling policy

Guideline directing employees to resolve customer complaints per company procedures.

Detective control

Internal control (e.g., annual audit) that identifies existing errors or fraud.

Retained earnings

Portion of net income kept in the business; listed under owner’s equity on the balance sheet.

Capital-intensive process

Production relying heavily on costly equipment rather than labor.

Budget as financial control

Use of a budget to monitor spending and prevent overspending.

Insurance company

Financial institution that insures customers against specified risks in return for premiums.

Firewall

Network barrier that blocks unauthorized access and helps prevent identity theft online.

Uninsurable risk

Risk (e.g., changing customer buying habits) that insurers will not cover due to unpredictability.

Central data repository

Single storage location that keeps organizational data consistent, current, and accessible.

Present value

Amount that must be invested today (e.g., $565) to reach a future sum given a discount rate.

Purchase price variance

Difference between standard and actual costs of raw materials.

Referral networking

Seeking a recommendation or letter of reference from a contact to a potential employer.

Compliance controls

Organizational mechanisms designed to meet legal and regulatory requirements.

Risk avoidance

Eliminating a risk altogether, such as choosing a non-controversial alternative.

Stakeholder desires

Interests that corporate governance seeks to balance among customers, investors, and others.

Confidential information

Sensitive data employees must keep private, even if learned unintentionally.

Indirect cost

Expense (e.g., insurance) not directly traceable to a specific product, project, or department.

Marginal analysis

Decision tool comparing marginal revenue with marginal cost to assess profitability.

Audit ethics breach

Providing incomplete data during audits, endangering credibility and compliance.

Inside director pay

Internal board members typically are not paid extra for serving on the board.

Stock information access

Abundant, easily obtainable data now available to individual investors.

Short-term financial goal

Objective achievable within months, such as saving $50 for holiday gifts.

Domain name

Registered web address that identifies a website online.

Responsibility

Accepting blame for failures and credit for successes; fulfilling obligations dependably.

Quality circle

Small group of employees who meet to solve work-related problems and recommend improvements.

Profit requirement

Need for a business to earn profit to sustain operations and contribute to society.

Enterprise Risk Management (ERM)

Integrated process of objective setting, risk assessment, and response across an organization.

Profit ratio comparison

Technique of analyzing customer financial data by comparing regional profit ratios.

Accounting purpose

Maintaining accurate records of all financial transactions and information.

Environmental scanning focus

Limiting attention to information relevant to the business environment.

Social networking

Forming professional relationships during informal social gatherings.

Asset utilization ratio

Measure of how efficiently management uses assets to generate sales.

Peaceful protest guideline

Ensure demonstrations avoid violence and vandalism to remain effective and lawful.

Intellectual property

Intangible assets—patents, trademarks, copyrights—derived from creative thought.

Credit score

Numerical rating of credit history used to evaluate loan applications.

Customer feedback

Input that prompts businesses to evaluate and adjust policies.

Managerial accounting future view

Discipline focused on forward-looking information for planning and control.

Specific goal

Clearly measurable objective, such as reducing costs by 5%.

Ponzi scheme

Fraudulent investment that pays returns to older investors with funds from new investors.

Data normalization

Database process that removes redundancy and organizes data efficiently.

Email reputational risk

Potential damage when negative information sent by email is shared beyond intended recipients.

Compliance technology efficiency

Automation makes compliance processes faster and less error-prone than manual methods.

Self-control for positivity

Using discipline to eliminate negative thoughts and foster a positive attitude.

Financial statements

Reports (e.g., balance sheet, income statement) public companies must file periodically.

Marketing activity

Primary business function focused on creating, communicating, and delivering value to customers.

Leadership responsibility

Taking ownership of problems, fixing them, and preventing recurrence.

Equity (statement of changes)

Represents retained earnings and other owner interests over a period.

Consumer spending

Expenditure that typically decreases during economic contractions.

Information quality evaluation

Assessing data for accuracy, relevance, and currency before use.

Financial convergence benefit

Higher earnings often gained when financial firms merge or consolidate.

ERP system

Enterprise software integrating data and processes; key source for master data management.

Capital market

Marketplace where long-term securities like stocks and bonds are traded.

Deregulation

Reduction of government rules, accelerating financial-market globalization.

Bond yields in expansion

Rates typically rise as economic growth boosts demand for funds.

Credit analyst

Bank employee who evaluates borrowers’ creditworthiness before loans are issued.

Supportive listening cues

Nodding, smiling, and eye contact that encourage and respect a speaker.

Inflation

Sustained rise in general price levels that erodes purchasing power over time.

Customer count (cost driver)

Number of patrons that causally affects costs, such as internet expenses in a café.

Digital dashboard

Visual tool that models financial data and enables “what-if” scenario analysis.

Process streamlining

Mapping, analyzing, redesigning, resourcing, and implementing more efficient workflows.

Lobbying

Activity through which trade associations influence legislation affecting their members.

Formal communication

Structured, official information flow through established organizational channels.

Online research

Fast, broad method for gathering current information using internet search tools.

Word-of-mouth promotion

Customer advocacy goal of positive experiences shared with others.

Specific market-share data

Including exact percentages for each company within a defined period.

Empathy

Considering how actions affect others’ feelings when making decisions.

Invoice

Document recording a sale’s details; helps track customer purchasing patterns.

Budgeting software

Application that organizes financial data to simplify the budgeting process.

Security guards

Personnel who deter theft by monitoring premises and exits.

Stakeholder expectations

Key factor shaping corporate governance structures and practices