homework 5 ECON

conservative

overtstating expenses and losses in budgets

comprehensive budget

a budget including operating and capital budget designed to show all financial aspects

operating budget

recurring income and expenses

capital budget

nonrecurring events, short-term goals

free cash flow

income after deducting living expenses and debt

line of credit

loan so that money can be borrowed and paid down as desired

specialized budget

budget focused on one asset, activity, or goal

tax budget

budget focused on tax consequences of projected activities

budget variance

difference between actual results and budget results

spread

difference between two interest rates

progressive tax

tax rate that increases as the amount taxed increases

tax brackets

range of income that defines an income tax rate

sales tax

taxes the consumption of goods and services

regressive taxes

tax rate that decreases as the amount to be taxed increases

value-added tax

sales tax that spreads the burden to producers

excise tax

tax on specific goods made in a country

estate tax

tax on intergenerational transfer of wealth after death

dividend

share of profit distributed to shareholders

cost basis

original cost of an asset calculated upon sale

tax avoidance

legal attempt to minimize tax obligations

tax evasion

illegal attempt to report financial info by minimizing tax obligations

defined contribution

tax-advantaged pension plan that both employer and employee may contribute to

adjusted gross income

income-adjustments

tax credit

amount that reduces taxes owed

form 1040

US income tax return form

W-2 form

reports wages earned and taxes withheld

1099 form

reports non-wage income