Business Praxis 5101 - Accounting/Finance & Communications/Career Development 100% Pass

Business Praxis 5101 - Accounting/Finance & Communications/Career Development 100% Pass fixed asset asset that is used to generate profit. It will not be turned into cash within the year. Ex: land, buildings, cars, equipment variable asset asset that is transformed to cash within a year. Includes inventory of the actual product. Can also include accounts receivable. intangible asset asset that is a brand name, logo, trademark, and patents. liquidity refers to how easily an asset can be bought or sold on the market at the same price. equity shows what the owner has contributed in addition to the retained earnings. Ownership minus the debts. depreciation refers to how things lose value as time goes on. cash flow refers to the actual cash that is going in and out of a business, such as revenues or expenses. Generally Accepted Accounting Principles GAAP Securities and Exchange Commission SEC Financial Accounting Standards Board FASB cash and accrual accounting the two majors types of accounting systems. cash accounting in this accounting the transactions are counted when the money is actually received or the expenses are paid out. accrual accounting in this accounting the transactions are counted when the orders are made or delivered, even if no cash has actually been exchanged. Assets = Liabilities + Owner's Equity accounting equation trial balance a document showing the ending balances of ledger accounts trial balance a document, on the top is the title, entity, and accounting period. Then the account titles are listed. Then there is a list of the debits (assets and expenses) on the left and a list of the credits (liabilities, income, and equity) on the right. The sum of the credits and debits are at the bottom. manual system in this method, people do the calculations on paper by hand. computerized system in this method, people input the calculations into a computer system. income statement this document shows companies profitability for a period of time. income statement this document contains elements including revenues, gains, expenses, and losses. income statement this document will display the net profit or loss for the period of time is covers. income statement balance sheet this document is a snapshot showing the financial situation of the company. balance sheet report form account form two forms of balance sheets statement of retained earning shows how a business's retained earnings change over a period of time. retained earnings a business's accumulated net income with the dividends that were given to stockholders subtracted. starting retained earnings + net income - stockholder dividend = final retained earnings general retained earnings equation retained earning statement of cash flow document that outlines the influx and outflow of cash from a company. statement of cash flow liquidity ratios measure if a company can meet its obligations in the short term. payroll record this will contain identifying information such as the employee's name, social security number, address, birth date, gender, occupation, deductions such as taxes, contributions to retirement accounts, or deductions for healthcare expenses. May also include: hiring letter, a pay authorization, employee's tax forms, payroll deduction forms, direct deposit forms, time sheets, records of attendance, and all other forms related to payment. periodic and perpetual inventory systems two major types of inventory systems perpetual inventory system in this inventory system, the inventory changes and cost of goods sold are updated in real time as the items are sold. Other inventory changes, such as returns, are also recorded immediately. periodic inventory system in this inventory system, a purchases account record is changed when the purchase is made, but the cost of goods sold and inventory doesn't change until the accounting period closes. inventory costing the process of assigning a cost to a particular item. FIFO (first in, first out) method this inventory costing system is the oldest cost is assigned to the first item sold, then the next oldest cost to the next item sold, and so on. LIFO (last in, first out) method this inventory costing system is the most recent cost is assigned to the first items sold. This method is used less often. average cost method inventory costing method that keeps a running average of inventory and assigns the item sold the current average management accounting refers to the evaluation of information for the purpose of managers. Use this to make short-term decisions. cost accounting useful for managers to help make decisions while planning and controlling can help managers make a decision on whether to continue with the project or product and ways they can improve it. helps managers decide how much to charge for certain processes or services because they will know how much it cost. direct cost the costs that go directly into making a product indirect cost a cost incurred to the company as a whole and is necessary but not directly tied into one product fixed cost costs that stay the same. variable cost a cost that can change. cost-volume-profit analysis looks at how alterations in the costs and sales volume change the profit of a company. break-even analysis calculates when the expenses of a company are covered and there is a profit. return on investment shows an investment's efficiency securities financial assets that can be traded securities these include many different stocks and bones, and are not tangible items. Ex: bonds, bank notes equity securities stock in which the investor purchases a small portion of a company the greater the return in investments, the greater the risk the less the return in investments, the smaller the risk mutual fund are businesses that take money from a variety of investors and put it in a portfolio of bonds, stocks, securities, and assets stocks investors purchase a very small amount of a company bonds an investor is loaning money to an institution, in exchange, the institution a premium Federal Insurance Contributions Act (FICA) and Medicare these taxes fund the federal programs that provide money and health benefits to senior citizens, the disabled, and other eligible individuals gains taxes based on profit from a non-inventory asset such as bonds, stocks, property, and precious metals home equity loan a loan in which a persons home equity is put up as collateral in case the person defaults on the loan variable loan a loan in which the interest rate changes along with the market interest rate, changing the payments fixed interest rate loan a loan in which the interest rate stays the same during the life of the loan for a decade chapter 7 and 11 stay on your credit report for as long as a seven years chapter 13 on your credit report could come off in as little as seven years negative accounts about delinquent accounts that lower credit may stay for Annual Percentage Rate (APR) APR life insurance a type of coverage people buy that pays out upon a person's death. This is an investment term life insurance a type of coverage people buy for a certain amount of time. This is not an investment beneficiary the person who receives the money upon the insured person's death. a rider someone who changers provisions or clauses of the insurance policy automobile insurance an insurance that covers drivers in the case of an occurrence that causes some sort of damage or harm liability coverage a automobile insurance coverage that provides benefits to damages suffered by other drivers collision coverage an automobile insurance coverage for cars involved in an accident premiums the amount a person pays monthly or regularly to maintain coverage comprehensive insurance this automobile insurance covers car damages without a collision such as from vandalism or weather-related events. property insurance an insurance that provides coverage against a wide variety of risks and includes fire insurance, earthquake insurance, home insurance, and flood insurance replacement insurance insurance that give benefits so people can replace lost items preferred provider plan (PPO) a health insurance plan which generally gives greater benefits if an individual sees someone "in network" as compared to "out of network" profit margin this makes it possible to compare companies of different sizes because it is expressed as a percentage line graph this graph shows the connection between information. It is often used to show changes over time. scatter plot this shows how two variables are related to each other. compound interest is when interest gets added back to the principle and then interest is calculated on that additional amount when the next compounding period happens. business letters these are sent for a wide variety of reasons and can be very formal, may contain confidential and important information. memoranda a less formal method of communication and may be used for announcements, information dissemination, and directions. They may be sent to a lot of people at once and are generally short and to the point.