DECA PFL Exam Master List

These flashcards cover key concepts and terminology relevant to the DECA PFL Exam, providing definitions and explanations for essential financial principles.

Credit

The arrangement by which businesses or individuals can purchase now and pay later.

Tax incentives

An aspect of a government's taxation policy designed to incentivize or encourage a particular economic activity by reducing tax payments.

Tax rebate

A refund of taxpayer money after a retroactive tax decrease.

Discount

A deduction from the usual cost of something, typically given for prompt or advance payment.

Savings account

A type of investment in which you lend money to a bank for the benefit of being able to access it at any time.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the U.S. government that protects bank depositors against the loss of their insured deposits.

Certificate of Deposit (CD)

A lending investment in which you lend money to a bank at a set interest rate for a particular period.

Collectibles

Items worth far more than their original sale price and are considered alternative investments.

Alternative investments

Vehicles that don't fall into any other category like stocks, bonds, cash, or real estate.

Securities

Fungible, negotiable financial instruments that hold monetary value.

Opportunity cost

The benefit that is lost when a person decides to use scarce resources for one purpose rather than another.

Discretionary income

The amount of an individual's income left for spending, investing, or saving after paying taxes and necessities.

Salary

A fixed regular payment made by an employer to an employee, typically expressed as an annual sum.

Wage

A fixed regular payment made by an employer to an employee, typically on a daily or weekly basis.

Dividend

A sum of money paid regularly by a company to its shareholders out of its profits.

Interest

The monetary charge for borrowing money or delaying payment, generally expressed as a percentage.

Gross income

The total amount earned before taxes or other deductions.

Net income

The total amount of money earned minus expenses, interest, and taxes.

Fixed costs

Expenses that remain the same from month to month.

Variable costs

Expenses that vary from month to month.

Discretionary costs

Avoidable or non-essential expenses.

Intermittent costs

Expenses that occur at various times throughout the year and tend to be in large lump sums.

Income tax

A type of tax that governments impose on businesses and individuals.

Year To Date (YTD)

The term covering the period of time between the beginning of the year and the present.

Credit agency/credit bureau

A business that maintains files of credit information on individuals and businesses.

Ownership investment/equity

Becoming a partial owner of a company through the purchase of investments like stock.

Lending investment

A type of investment in which you cover a company or person's debt with an agreement for repayment with interest.

Cash equivalents

Investments that are 'as good as cash', meaning they are very liquid.

Liquid

Assets that are easy to sell or convert into cash with little to no loss in value.

Insurance

An agreement in which one pays for specific losses incurred by the other in return for premium payments.

Rule of 72

A way to estimate how long an investment will take to double based on a fixed annual interest rate.

Health insurance

A contract in which a company agrees to cover some healthcare costs in return for a monthly premium.

Annual Percentage Rate (APR)

The yearly interest generated by a sum charged to borrowers or paid to investors.

Adjusted balance method

An accounting method that bases finance charges on the amount owed at the end of the billing cycle.

Finance charge

Adjusted balance x periodic rate x number of periods.

Adjusted balance

Previous balance minus (payments plus credits).

New balance

Adjusted balance plus finance charge plus new purchases plus fees.

Periodic rate

The interest rate charged for each period, such as monthly or quarterly.

Credit unions

Cooperatives providing financial products and services to a group with a common interest.

Certified Public Accountant (CPA)

A designation provided to licensed accounting professionals.

Certified Financial Planner (CFP)

A formal recognition of expertise in financial planning and related areas.

Chartered Financial Analyst (CFA)

A globally-recognized professional designation for financial analysts.

Bond

A fixed-income instrument that represents a loan made by an investor to a borrower.

Truth in lending laws

Laws requiring lenders to disclose the true cost of a loan, including interest rates.

Economic resources

Items that can be used to produce goods and services; they are limited in supply.

Purchasing power

A consumer's ability to purchase goods and services.

Federal funds rate

The interest rate that U.S. banks pay to borrow or loan money overnight.

Federal Open Market Committee (FOMC)

Division of the Federal Reserve that manages open market operations.

Federal Reserve

The central bank of the U.S., responsible for conducting monetary policy.

Central bank

A financial institution that manages a nation's currency, money supply, and interest rates.

Monetary policy

A set of tools used to control the overall money supply and economic growth.

Fed pivot

The moment when the Federal Reserve changes its monetary policy direction.

Expansionary/loose

A macroeconomic policy that seeks to encourage economic growth.

Contractionary/tight

A macroeconomic policy that seeks to slow down economic growth.

Fiscal policy

The use of government spending and tax policies to influence economic conditions.

Macroeconomics

A branch of economics that studies the behavior of the overall economy.

Microeconomics

A branch of economics that studies the implications of incentives and decisions on an individual level.

Money supply

The total quantity of money that exists in a nation at a given time.

Export quotas

Restrictions on the quantity of goods that can move out of a country.

Inflation

A rise in prices, which declines purchasing power over time.

Cost of sales

The accumulated total of all costs used to create a product or service sold.

Professional fees

Non-refundable charges paid in advance for services of professionals.

Technology costs

Expenses associated with technology asset acquisition, deployment, and maintenance.

Administrative costs

Expenses not directly tied to core functions like manufacturing or sales.

Overhead

Ongoing business expenses not directly attributed to creating a product or service.

Sales and marketing costs

Expenses directly and indirectly related to selling and marketing a product or service.

Budget credit account

Credit accounts that advertise terms like "90 days Same as Cash."

Installment credit account

Credit accounts providing a lump sum to be repaid in fixed installments.

Open credit account

Credit accounts that allow electronic purchases without interest rates, paid in full each month.

Revolving credit account

Credit accounts with a credit limit and minimum monthly payment options.

Charge sale

A type of sale allowing customers to buy merchandise on credit.

Collect On Delivery (COD) sale

A sale where payment is made upon delivery of an item.

Cash sale

A sale where payment is made with immediate funds.

Layaway sale

A sale where an item is held for a customer until payment is made.

Time value of money

The financial principle that a dollar today is worth more than a dollar in the future.

Dividend reinvestment plan (DRIP)

A method used by investors to use stock dividends to purchase more shares.

Capital budgeting

The process financial managers use to determine which projects to invest in.

Accrual accounting

An accounting method where payments and expenses are credited and debited when earned.

Seniority

The length of time an employee has been with a business.

Goodwill

An intangible asset that represents the value giving a company a competitive advantage.

Balance sheet

A financial statement that reports a company's assets, liabilities, and shareholder equity.

Short-term time horizon

Investing for a goal to be reached in less than five years.

Intermediate-term time horizon

Investing for a goal to be reached in five to fifteen years.

Long-term time horizon

Investing for a goal to be reached in more than fifteen years.

Internal financial report

A report compiling financial information for management's decision-making.

External financial report

A report compiling financial information for distribution to shareholders and investors.

Yield percentage

The rate of return on a security, determined by dividing the dividend by its closing price.

Rate of Return (RoR)

The net gain or loss of an investment expressed as a percentage of its initial cost.

Volume

How many shares or contracts were traded in an asset over a period of time.

Net change

The difference between a stock's closing price and the previous day's price.

Ticker

A system of letters that uniquely identifies a company.

Risk pyramid

An asset allocation strategy that balances low-risk and high-risk assets.

Defined benefit

A retirement plan that guarantees a specific benefit at retirement.

Defined contribution

A retirement plan mostly funded by the employee with employer matching contributions.

401(k)

A retirement savings plan offered by employers with tax advantages.

Individual retirement account (IRA)

A long-term savings account allowing individuals to save for retirement with tax benefits.

Traditional IRA

An IRA that allows directing pre-tax income towards investments, growing tax-deferred.

Roth IRA

An IRA where contributions are made with after-tax income, allowing tax-free growth.

SEP IRA

An IRA that allows employers to make discretionary contributions for eligible employees.

SIMPLE IRA

A retirement savings plan for small businesses with contribution matching options.