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Financial Literacy > Accounting Info > Flashcards

Accounting Info Flashcards

1
Q

Four Factors of Production

A
  1. Labor
  2. Capital
  3. Entrepreneurs
  4. Physical Resources
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2
Q

Planned Economies

A

Communism & Socialism

  • government owns all businesses and control decisions
  • government expecting society to take over production once it has matured
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3
Q

Per Capita Rate of Consumption

A

The average consumption by a person belonging to a particular nation

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4
Q

Monopolistic Competition

A

Competition between businesses in the market

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5
Q

Oligopoly

A

Industry characterized by a handful of sellers with the power to change prices
- follows a trend from other businesses to protect sales

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6
Q

Monopoly

A

Industry has only one producer, having complete control of prices

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7
Q

Aggregate Output

A

Total quantity of goods produced during a given period

Trend : increase, means economic growth

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8
Q

Gross Domestic Product (GDP)

A

Total value of all goods and services produced within a given period
Trend: GDP goes up, aggregate output goes up

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9
Q

GDP per Capita

A

GDP per individual person

Total GDP/Total population = GDP per Capita

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10
Q

Productivity

A

A measure of economic growth comparing how much a system produces with its resources needed

Trend: Increase in productivity = government standard of living increases

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11
Q

Balance of Trade

A

Value of products that are exported - the value of imported products

Trend:
positive - exports more than imports
negative - imports more than exports

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12
Q

Inflation

A

Widespread price increases, additional money distributed proportionately

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13
Q

Consumer Price Index

A

Measures the prices of typical products purchased in urban areas
- a method of measuring inflation based on price increases

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14
Q

Recession

A

A period which aggregate output declines

- producers need fewer employees to produce products

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15
Q

Fiscal Policies

A

Policies used by government regarding how it collects and spends revenue

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16
Q

Monetary Policies

A

Policies used by a government regarding its control over the size of its money supply

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17
Q

Variable costs

A

These costs varies goes up you sell more

Ex: supplies, hourly labor, commission, ingredients

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18
Q

Fixed costs

A

Same however much you sell

Ex: rent, fixed salaries

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19
Q

Profit

A

Sales- Costs

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20
Q

Costs

A

Fixed Costs + Variable Costs

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21
Q

Compound Growth

A

Cumulative growth from interest paid to investors over a period of time

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22
Q

How long does it take to double your investment?

A

“Rule of 72”
- divide the annual interest rate or the # of years that you want to double your money by 72

Ex: reinvest annually by 8% you’ll double your money in 9 years
72/8 = 9

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23
Q

Stock

A

A portion of ownership of a corporation.

The ownership of a company is broken down into smaller parts called shares, which you could buy and sell.

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24
Q

Stocks expressed - Market Value

A

Current price of a share in the stock market

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25
Q

Stock expressed - Book value

A

The firms owners equity divided by the # of common shares owned by shareholders

26
Q

Dividend

A

A payment to shareholders from the company’s earnings

27
Q

Blue Chip Stock

A

A common stock issued by a respected company with a stable pattern of dividend payouts

28
Q

Mutual Funds

A

Company that pools cash investments from individuals and organizations to purchase a portfolio of stocks, bonds, etc…
Cannot be traded like a stock.

29
Q

No loan fund

A

Not charged sales commissions when they buy or sell funds

30
Q

Loan fund

A

Investors are charged sales commission when they buy or sell funds

31
Q

Exchange Traded Funds (ETF)

A

A bundle of stocks/bonds that are in an index tracking the overall movement of a market. It can be traded like a stock.

32
Q

Advantages of ETF’s over Mutual Funds

A
  1. Traded like a stock, low operating expenses
  2. Annual Fees are as low as .04% of assets
  3. Require no minimum investment, although because ETF must be bought and sold through a broker they require transaction fees
33
Q

Trading securities

A

Stocks, bonds, mutual funds are known as securities because they represent secured claims by investors

34
Q

Security Markets

A

Markets in which stocks and bonds are sold

35
Q

Primary Security Markets

A

New stocks and bonds are sold and bought by firms and governments

36
Q

Securities & Exchange Commission

A

Government agency that regulates U.S. security markets

37
Q

Investment bank

A

Financial institution that specializes in issue it and reselling new securities

38
Q

Investment banking services

A
  1. Advise companies
  2. Buy and assume liability for new securities
  3. Create distribution networks
39
Q

Second security market

A

Market in which stocks are sold to the public

40
Q

Stock exchange

A

Institutional auction setting in which stocks can be bought and sold
- buyers can use NYSE’s Direct service to automatically conduct trades electronically

41
Q

Stock broker

A

Executes buy/sell orders on behalf of customers in return for commission
- brokers offer clients consulting advice in personal financial planning/strategies

42
Q

Dow Jones Industrial Average

A

U.S. market index, measures the performance of the industrial sector of the U.S. stock markets from firms on the NYSE (30 blue chip companies)

43
Q

S & P 500

A

Market index of U.S. equities based on the performance of 500 large cap stocks

44
Q

The Russel 2000 index

A

Index that uses 2000 stocks to measure the performance of the smallest U.S. companies

45
Q

Calculating Total Return from investment

A

(Current dividend payment + capital gain)/ (original investment)
multiplied x100 = Total Return (%)

46
Q

Secured Loan

A

The borrower guarantees repayment of the loan by pledging the asset as collateral

47
Q

Collateral

A

Asset pledged for the fulfillment of repaying a loan

- banks gains possession of pledged assets

48
Q

Annual Percentage Rate (APR) - one year rate that is charged for borrowing

A

One year rate that is charged for borrowing

49
Q

Unsecured Loan

A

Loan for which collateral is not required

- requires good credit history

50
Q

Maturity date

A

Future date when repayment of a bond is due from the borrower

51
Q

Face Value

A

Amount of money that the bond buyer (lender) lent the issuer and that the lender will receive on repayment

52
Q

Default

A

Failure of borrower to make payment when due to a lender

53
Q

Gross profit

A

Firms revenue - cost of revenues

54
Q

Operating Expenses

A

Costs other than the costs of revenues

55
Q

Net Income

A

Gross Profit - Operating expenses and income taxes

56
Q

Income Statements

A

“Profit and loss statements”

- description of revenues and expenses

57
Q

Earnings per share

A

Net Income divided by # of shares of common stock

- used to either buy or sell the firms stock

58
Q

Return on Equity

A

Annual net income / stockholders equity

59
Q

Pension Fund

A

No deposit pool of funds managed to provide retirement income for its members

60
Q

Du Pont Analysis

A

ROE = Profit Margin x Asset Turnover x Financial Leverage

Net Income Net Income Net Sales Average Total Assets
————— = ————- X ————- X ————————
StakeH Equity Net Sales Average Total Assets Average stockholders Equity

Financial Literacy (1 decks)

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