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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 |
Created by:
KIMBRIEL
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