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Management Terms 5
Management Unit 5 Terms
Question | Answer |
---|---|
Accounting | A systematic process of recording and reporting the financial information resulting from business transactions |
Accounting equation | Asset’s = Liabilities + Capital |
Accounts payable | Money owed for credit purchases |
Accounts receivable | the amount owed by customers |
Actuaries | persons who calculate insurance rates |
Assets | things owned, such as cash and buildings |
Balance sheet | a financial statement that lists the assets, liabilities, and capital of a business |
Bank | an institution that accepts demand deposits and makes commercial loans |
Beneficiaries | persons who receive a life insurance payment on the death of an insured person |
Bond | a long-term written promise to pay a definite sum of money at a specified time |
Bonding | provides payment of damages to people who have losses resulting from the negligence or dishonesty of an employee or from the failure of the business to complete a contract |
Book value | the value of a share of stock that is found by dividing the net worth (assets minus liabilities) of the corporation by the total number of shares outstanding |
Budget | a financial plan extending usually for one year |
Capacity | earning power |
Capital | what a business is worth after subtracting liabilities from assets |
Certificate of Deposit (CD) | a savings account that requires an investor to deposit a specified sum for a fixed period at a fixed interest rate |
Certified Public Accountant (CPA) | a person who has met a state’s education, experience, and examination requirements in accounting |
Character | an indication of one’s moral obligation to pay debts |
Check | a written order on a financial institution to pay previously deposited money to a third party on demand |
Collateral | property a borrower pledges to assure repayment of a loan |
Commercial bank | a financial institution that provides many services, such as handling time and demand deposits and commercial and consumer loans |
Commercial loan | a loan made to a business |
Common stock | ownership that gives holders the right to participate in managing the business by having voting privileges and by sharing in the profits (dividends) if there are any |
Conditions | relate to economic and other matters such as the economic health of an community or nation and the extent of business competition that affects credit decisions |
Consumer loan | a loan made to an individual |
Debit card | allows a person to make cash withdrawals from ATMs, pay bills by phone from bank accounts, and pay for onsite purchases such as food and household items |
Deductible | an arrangement that permits the insured to bear part of the loss in return for a lower premium |
Demand deposit | money put into a financial institution by depositors and which can be withdrawn at any time without penalty |
Depreciation | decrease in the value of an asset due to wear and age |
Direct deposit | allows business to electronically transfer employees’ paychecks directly from the employer’s bank account to employees’ bank accounts |
Disability insurance | offers payments to employees who are no longer able to work because of accidents or illnesses |
Electronic Fund Transfer (EFT) | transferring money by computer rather than by check |
Endorsement | the signature--usually on the back--that transfers a negotiable instrument |
Equity capital | money invested in the business by its owner or owners |
Financial statements | reports that summarize financial data over a period of time |
Fixed assets | material assets that will last a long time |
Health insurance | provides protection against the expenses of health care |
Health Maintenance Organization (HMO) | a cooperative agreement between a business and a group of physicians and other medical professionals to provide for the health care needs of the employees of the business |
Income statement | a financial document that reports total revenue and expenses for a specific period |
Initial Public Offering (IPO) | the first time a company sells stock to the public |
Installment credit | credit used when a customer makes a sizable purchase and agrees to make payments over an extended but fixed period of time |
Insurance | a risk management tool that limits financial loss from uncontrollable events in exchange for regular payments |
Insurance agent | people who represent the insurance company and sell insurance to individuals and businesses |
Insurance rate | the amount charged for a certain value of insurance |
Insured | the persons or organization covered by the insurance policy |
Investment companies | an organization that specializes in the sale of a variety of stocks, bonds, and other securities |
Lease | a contract that allows the use of an asset for a fee |
Liabilities | claims against assets or things owed—the debts of a business |
Liability insurance | provides protection for risks involved in operating a business |
Life insurance | provides money that is paid upon the death of the insured to a person or people identified in the insurance policy |
Liquidity | refers to the ease of turning an investment into cash without significant loss |
Long-term capital | capital that is borrowed for longer than a year |
Long-term notes | loans written for periods of 1 to 15 years |
Malpractice insurance | a type of liability insurance that protects against financial loss arising from suits for negligence in providing professional services |
Market value | the value at which stock is bought and sold on any given day |
Money market account | a type of savings account in which the deposits are invested in short term, government-backed securities |
Mutual fund | pools the money of many small investors for purchases of stocks and bonds |
No-fault insurance | each insurance company is required to pay the losses of its insured when an accident occurs, regardless of who might have been responsible for the loss |
Non-bank financial institution | an institution that offers on demand deposits or commercial loans, but not both |
Obsolescence | decrease in the value of an asset because it is out of date or inadequate |
Par value | a dollar value shown on a share of stock, which is an arbitrarily assigned amount that is used for bookkeeping purposes |
Peril | the cause of a loss for a person or organization |
Policy | the written agreement, or contract, between the insurer and the policyholder |
Preferred Provider Organization (PPO) | health care available from a selected set of physicians and health care facilities through negotiated contracts between the health care providers and the insurers |
Preferred stock | ownership that gives holders preference over the common stockholders when distributing dividends or assets |
Premium | a payment by the policyholder to the insurer for protection against a risk |
Prime rate | the lowest rate of interest; the rate at which large banks loan large sums to the best-qualified borrowers |
Promissory note | an unconditional written promise to pay a certain sum of money, at a particular time or on demand, to the order of one who has obtained the note |
Retained earnings | profits that are put aside to run a business |
Revolving credit plan | a credit plan that combines the features of regular charge credit and installment credit |
Risk | the uncertainty that a loss may occur |
Savings account | an account that allows customers to make deposits, earn interest, and make withdrawals at any time without financial penalties |
Secured loan | a loan that requires the borrower to pledge something of value as security |
Securities | stocks and bonds |
Short-term capital | borrowed capital that must be repaid within a year, and often in 30, 60, or 90 days |
Smart card | a credit and debit card with a memory that stores financial, health, credit, and other kinds of data that can be read by computers |
Stock | a share of ownership in corporation |
Stock index | a kind of average of the prices of selected stocks considered to be representative of a certain class of stocks or of the economy in general |
Stockbroker | a professional who buys and sells corporate securities for customers through a stock brokerage firm and gives investment advice |
Treasury bill (T-bill) | short-term security sold by the federal government to finance the cost of running the government |
Treasury bond | securities sold in $1,000 to $1 million amounts with maturities ranging from 10 to 30 years |
Treasury note | securities sold by the US government in amounts of $1,000 up to $5,000 that generally mature in one to ten years |
Unsecured loan | a loan that is not backed by collateral |
Venture capitalist | an investor or investment group that lends large sums of money to promising new or expanding small companies |
Working capital | the difference between current assets and current liabilities |