DECA Finance Vocab

Accounting

A system that monitors an individual, business, or other organizations financial standing. This includes recording and verifying financial information to determine a profit or loss for a given time period as well as the value of assets, liabilties, and owners' equity.

Financial Globalization

The worldwide development of economic, financial, trade and communication integration. This pushes business executives to consider broad views in the global marketplace as countries and their economies become interconnected and interdependent.

Debtor

A person or business that owes money, goods, or services to another.

Costing

A process to determine the cost of production or operation of a business by assigning expenses to various stages of production or operations of a firm

Expenditure

The payment of cash for goods or services to settle an obligation; usually seen as an invoice or receipt

Financial Information Management

Managing data such as credit card numbers, accounting balances or other monetary facts about an individual, business, or other organization that are used when evaluating credit, loans, or other financial activities

Estate Tax

A tax paid on wealth, collected after a person has died

Savings

The portion of a disposable income that is not spent on essential expenses in a household or business. A variety of savings vehicles are available to increase the value of savings including a bank savings account, stocks, bonds, etc.

Financial Position

The status of the assets, liabilities and owners' equity of an individual, business, or other organization as shown in its financial statements

Money Market

A network of banks, discount houses, institutional vendors, and money dealers who borrow and lend among themselves for the short term (90 days). Any investment has a risk, but a money market account is considered a safe place to invest due to its short term nature.

External Risk

The possibility of loss, damage, or injury outside of a business or other organization.

Consolidation

Combining assets, equity, liabilities, and operating accounts of a business and its subsidiaries into one financial statement OR combining two or more businesses through the purchase, merger, or ownership transfer to create a new business

Voluntary Compliance

The assumption that taxpayers will stay in compliance with tax laws and accurately report their income amounts and tax deductions fairly and honestly

Creditor

The entity that provides available capital resources to debtors, in exchange for compensation.

Risk Management

The process of controlling an individual, business, or other organization for damage, loss, or injury to ensure the safety of the community, environment, and legal responsibilities.

Inventory System

An inventory system allows a business to maintain the optimum number of each item. In doing so, a business can operate production of a good or service, sales or customer service at a lower cost

Compliance

Verification that a vendor meets the requirements of accepted practices, regulations, legislation, rules, standards, and/or the terms of a contract.

Financial Institutions

Organizations that are public or private whom act as a channel between savers and borrowers of funds. There are two types of institutions: depository and non-depository. Depository organizations are usually banks or credit unions. Non-depository organizations are often recognized as insurance companies or mutual funds.

Financial Records

The financial documentation for an individual, business or other organization. The most common records are a Cash Flow Statement, Income Statement, Balance Sheet and Tax Returns.

Data

Information in an unorganized form (alphabets, numbers, or symbols) that have a relationship with current conditions, ideas, or knowledge.

Customer Relationship Management (CRM)

At a minimum, this is a database of customer contacts, purchase history, and technical support. Additional elements can include profiles of potential clients, understanding and leveraging the needs of current customers, and enhanced customer service based on data analysis.

Budgeting

The process of determining a time specific financial plan for an individual, business or other organization to achieve a monetary goal.

Securities and Exchange Commission (SEC)

Government agency created in 1934 that is responsible for enforcing securities-related laws and setting standards for financial information about businesses that are traded on a stock exchange. The SEC has five commissions who are appointed by the President and confirmed by the senate who serve five year terms.

Internal Risk

The possibility of loss, damage or injury within a business or other organization.

Invest

Any activity where money is put at risk in the short term for the purpose of creating a profit in the long term. Most investment activities include conducting research and developing a long term plan for any assets that will be put at risk. Investment activities want to create and/or increase a positive outcome for the benefactor.

Economies of Scale

An internal or external reduction in long term costs when production or operation increases in size.

Client Services

Any activity provided by a vendor on behalf of a client. Depending on the business this can include customer service, financial management, information technology, social media support, database management, etc. The services provided to a client are agreed on by both parties and detailed in a contract unless otherwise specified.

Financial Resources

Funds available to a business or person for spending in the form of cash, credit or securities.

Financial Markets

A market for the sale or purchase of stocks, bonds, bills of exchange, commodities, fortunes and options, foreign currency which work as an exchange for capital, and credit. In the United States, well recognized markets include the New York Stock Exchange (NYSE), the S&P 500, and the Chicago Mercantile Exchange (MCE or Merc).

Commodities Exchange

An open and organized marketplace where ownership titles or standard units of commodities are traded by its members.

Capital Market

A market for demand and supply of debt and equity capital. This is a highly decentralized system made up of three major parts: the stock market, bond market, and money market.

Capital Expenditures

The amount spent to acquire or upgrade an asset that will increase the efficiency of the production or operations of a business for the long term.

Gross Revenue

Amount of money that the purchasers of a company's products or services actually pay for those items.

Tax

Payment made to the government for services they provide.

Social Security (FICA)

A tax paid by workers so that they may receive benefits upon retirement.

Credit

A way to receive cash or goods, while paying later.

Periodic Inventory System

An inventory method in which items are counted only occasionally, by visual inspection - and can be completed manually, or through the use of technology, such as barcode scanners.

Database

The systematic organization of information that allows easy updating and analysis of data.

Financial Ratio

Financial ratios provide a comparison between financial statement items to determine the strength or weakness of a company. The most common ratios are: net sales to net worth and net income to net sales.

Cost of Goods Sold

This line on an income statement shows the cost of raw materials and labor to produce a finished product or service that is available to a consumer.

Client

A customer of a professional service provider or the primary contractor

Transaction

An agreement or contract that occurs between two or more parties and establishes a legal obligation. This can also be defined as an exchange of goods or services between a buyer and seller.

Compliance Program

The systematic process of a business or other organization to ensure that regulations imposed by a government agency are being met.

Capital

The most common definition of "capital" is money invested in a business to generate income. Capital can also be defined as wealth in the form of an asset which can be an indication of strength in an individual, business, or country.

Inventory Management

The process of buying and storing materials and products while controlling costs (for ordering, shipping, handling, and storage).

Exchange Rate

The value of one currency in terms of another, established on the foreign exchange market.

Convergence

The joining of two or more unique factors or phenomena, such as technologies. For example, the development of a smartphone was the convergence of telecommunications and internet technologies.

Just-In-Time Inventory

An inventory management method that coordinates the demand and supply for goods, delivering them just before they are needed.

Securities

An investment tool such as bonds, debentures, notes, options, and shares.

Risk Retention

A strategy in which an entity sets aside a sum as a protection against a probable loss, instead of transferring the risk by purchasing an insurance policy.

Data Mining

Reviewing very large amounts of data for useful information. This activity often uses advanced statistical tools to determine trends, patters, and relationships. Data mining can also be referred to as data surfing

Business Law

Laws that govern business and transactions between businesses.

Finance

The process of managing money for an individual, business or other organization.

Differential Cost

The difference in cost between two or more business decisions.

Securities Information

Information provided regarding an investment instrument issued by a corporation, government or other organization that demonstrates whether it is debt or equity.

Internal Audit

An examination of an organization's financial statements that is conducted by an employee of the organization.

Accounting System

The (often) computerized system of collecting, processing, analyzing and presenting accurate financial data to support management decisions.

Customer Relations

The way a business interacts with its customers in order to obtain new customers while maintaining the current customer base.

Compliance Officer

An employee of a business or other organization whose task is to ensure that regulations imposed by a government agency are being met as well as internal policies and procedures.

Financial Analysis

Evaluating an organization's financial statements to determine the profitability of the organization, a division within the organization or a specific event or project.

Sunk Cost

A cost that a business has incurred, but cannot recover.

Indirect Costs

Those costs which cannot be directly linked to a good, service or project.

Regression

A data-mining technique that takes a numerical dataset and develops a mathematical formula that fits the data.

Sustainability Reporting

Reporting by an entity that outlines it's economic, environmental and social performance.

Insurance Market

Composed of the companies involved in buying and selling insurance.

Time Value of Money

The increase of an amount of money due to earned interest or dividends

Managerial Accounting

Accounting that focuses on revenues and expenses of a business, reporting variances to management.

Equity

Includes earnings that a company has retained and the amount of funds invested in that company by its owners.

Property Tax

The main source of money for many local governments. This tax is based on the value of property such as land and buildings.

External Audit

An examination of an organization's financial statements by an independent accountant, not affiliated with the organization.

Solvency

Refers to the ability of an organization to meet its financial obligations.

Risk Transfer

A strategy in which an insurance risk is shifted to another party (the insurer) by means of an insurance policy.

Activity Based Costing

A method used by businesses to accurately allocate overhead costs to specific products.

Cost Allocation

Refers to the method in which indirect costs are assigned to a product.

Direct Cost

Those costs which can be directly tied to a good, service or product.

Information Management

The process of collecting and analyzing data that can be used in the strategic decision making process for a business.

Reporting

Used in finance to disclose an organization's financial standing.

Marginal Analysis

A decision making tool that compares the cost of an activity versus the benefits of the activity.

Professional Development

Process of improving capabilities of staff through access to education and training opportunities in the workplace, through outside organizations, or observing others perform the job.

Professional Relationship

Contacts made through business connections and interactions.

Variance Analysis

Refers to the difference between a planned and actual budget.

Corporate Governance

Refers to the rules and practices that direct and control an organization.

Six Sigma

The strategy involves creating groups of people within the business or organization who have expert status in various methods, and then each project is carried out according to a set of steps in an effort to reach specific financial milestones. A six sigma process is defined as one in which 99.99966% of products created are expected to be statistically free from defects.

Board of Directors

A group of individuals elected by stakeholders of an organization to govern the organization.

Transparency

Fully and accurately disclosing of financial information to the public.

Risk Management

Monitoring the opportunity for loss for a business.

Classification

A data-mining technique that uses a decision tree that requires a series of decisions.

Management Functions

The four functions of management include: planning, organizing, leading and controlling.

Inflation

Refers to rising prices and is an indicator of the stability of an economy.

Insurance

A contract between a business and the insurer that covers a specific business risk.

Risk Avoidance

Used when a business anticipates risk and refrains from certain business activities in order to avoid the risk.

Currency

Money.

Tax Law

The area of law that governs taxation. A tax is a fee charged by the government on a product, service, income or activity. The Internal Revenue Code is the name for all federal laws, which was written in 1939 and has been revised multiple times to present day. Each state that collects a tax has their own department of taxation as well as local municipalities.

Perpetual Inventory System

An inventory system that continually keeps track of the number of items in inventory, and can be done manually or by computer.

Sales Tax

Charged to customers as a percentage of the price of the item being purchased.

Income Tax

Calculated as a percentage of the taxable income workers earn while on the job.

Customer

An individual, business, or other organization that receives products or services for their own use.

Price

The value, in terms of money, placed on a good or service.

Financial Goal

Monetary objectives of an individual, business or other organization that are decided by future needs of those entities.

Bank Statement

A document showing activity on your account over the previous month, including a beginning and ending balance and all inflows and outflows during that time.