Business Mathematics and Business Organization Flashcards
Is a type of mathematics that is meant to teach people about money and provide them with the tools they need to make informed financial decisions.
Business Math
These are the suppliers of Funds
Individuals
These are the demanders of Funds
Businesses and Governments
Is a network of various institutions that generate, circulate, and control money and credit
Financial Systems
Are intermediaries that channel the savings of individuals, businesses, and governments into loans or investments
Financial Institutions
Considered as depository institution
Banks
Considered as contractual savings institution
Non-bank financial institution such as insurance and pre-need companies
Are forums in which the supplier and demanders of funds transact directly.
Financial Markets
a good place for individuals, banks, other companies, and governments to park cash for a short period of time, usually one year or less.
Money Market
is where stocks and bonds are traded, geared toward long-term investing
Capital Market
Type of business with a single owner or owned by one person who operates it for his or her own profit
Sole Proprietorship
There is no legal distinction between the business and the owner.
Single Proprietorship
Most popular forms of business because of its simplicity and ease of operation.
Sole Proprietorship
Has two or more owners doing business together for a profit; Expected to combine their skills and their personal wealth.
Partnership
Each of the partners can execute contracts that are binding, and each would be liable for all the partnership’s debts. This sharing of legal responsibility is known as
Joint and Several Liabilities
Is a legal document that prescribes the way a business is managed as well as the relationship between each partner.
Partnership Agreement
Is an entity created by law, owned by shareholders/stockholders who hold its common stock or preferred stock (equity) and enjoy many economic rights and responsibilities.
Corporation
Can sue and be sued; can be tried and convicted for crimes; enter into and be a party to contracts; and acquire properties under its name.
Corporation
Ownership claims (shares of common and preferred) can be freely traded among investors, without obtaining permission from other investors (for publicly traded companies).
Corporation
Include key corporate personnel as well as outsiders who are typically successful private business people or executives of other major corporations.
Directors of Corporation
Are responsible for hiring and firing key personnel (managers and executives) and setting corporate policies.
Directors
Is responsible for managing the firm’s day-to-day operations and the implementation of the policies approved by the Board of Directors.
President/Chief Executive Officer (CEO)
Is the highest-ranking body in a corporation, and the chairman of the board is the highest-ranking individual.
Board of Directors
True or False
the CEO can attempt to have an individual member of the board be voted out and a new board member voted in whenever conflict arises.
True
True or False
It is also possible for an individual to serve as CEO and chairman of the board at the same time.
True
Is a legal document generated at the inception of the corporation and can be changed only by a vote of the shareholders.
The Corporate Charter
Banks are established based on the following:
(sentences)
1.) Economic Justification of Banks - degree of competition, risk, potential customers, and availability of manpower have to be ascertained.
2.) Selection of Stockholders
3.) Determination of the kind of bank to be formed.
4.) Determination of the amount of capital to be raised.
Bank officials are carefully selected based on the following qualifications.
(Sentences)
1.) Should be of good moral character.
2.) Have an adequate knowledge of the banking system.
3.) Equipped with the necessary capital.
4.) Known in the community as honest and righteous citizens.
5.) Able and willing to contribute to the bank’s success.
Type of Corporation that Banks are required to be established as
Stock Corporation
Shall prescribe, pass upon and review the qualification and disqualifications of individuals elected or appointed bank directors or officers and disqualify those found unfit.
Monetary Board
To register a Bank under the Securities and Exchange Commission, it shall be accompanied by _______ issued by the Monetary Board of the Bangko Sentral ng Pilipinas (BSP) under its seal.
Certificate of Authority
Are set primarily to insure the protection of the depositors and investors.
Bank Reserves
Three main classifications of reserves
1.) Primary Reserves
2.) Secondary Reserves
3.) Investment Reserves
A reserve that consists of highly liquid assets of the bank and its main objective is to maintain the bank’s liquidity and solvency.
Primary Reserves
A reserve of composed of earning assets that can easily be converted to cash with the least delay and without loss.
Secondary Reserves
A assets (reserve) that do not qualify for the first two reserves. These are assets eligible for investment reserve, of longer maturities, and are expected to earn income.
Investment Reserves
Two main functions of a bank
Deposit and Loan
Other bank function not common knowledge of people
1.) Exchange function - deals with the transfer of funds
2.) Trust function - includes the administration of estates and the guardian of minor’s interest.
3.) Advisory function - includes providing advice on business dealings of clients.
Other bank services include:
Rental of safety deposit boxes/vault
Sale of drafts and cashier’s check
Sale of traveler’s check
Collection agents
Credit information
Payrolls
Are a type of safe usually located inside a bank vault or in the back of a bank. These boxes are typically used to store things such as valuable gemstones, precious metals, currency, or important documents.
Safe Deposit Vaults
Enumerate the types of way a Safe Deposit Vault can be opened
1.) Assigned Key
2.) Bank Key
3.) Signature
4.) Code
The bank function which constitutes as the lifeblood of banking institution
Deposit Function
Type of deposit account that are withdrawn upon presentation of checks during banking hours. Also known as current account or checking account.
Demand deposits
Type of deposit account that can only be withdrawn after a certain period of time or at a designated maturity.
Time Deposit
A type of Time Deposit account that is most common among us which is evidenced by a passbook and/or an ATM and may be withdrawn on demand.
Savings Deposits
A type of Time Deposit account that is evidenced by a certificate to the effect that the deposit can only be withdrawn at maturity or after due notice of withdrawal, usually 30 days and upon presentation and surrender of the instrument.
Time Certificate of Deposits
A type of Time Deposit account that are allowed to a maximum of two withdrawals a month but the account should not fall below the minimum allowable balance as specified by the bank. Has a specific higher maintaining balance; Has higher interest than savings deposit.
Special Time Deposits
True or False
Direct or primary deposits is made over the counter when the depositor him/herself brings his/her money and/or checks and other near cash items to the bank and hands them to the teller.
True
True or False
Derivative deposits is created from the proceeds of loan or when the borrower enters into an arrangement that the bank places the loan proceeds under a current account from which he can draw checks eventually.
True
The largest single source of income of the bank and extends to individuals, businesses, and governments.
Loan Function
True or False
Loans and Discounts are different things
False
Are advances on which interest is collected at maturity
Loans
Are advances on which interest is deducted in advance.
Discounts
Takes place when the creditor has the trust that the borrower is willing and able to pay (hint: answer is noun)
Credit
The most common negotiable documents used by banks are
1.) Bills of exchange
2.) Promissory Note
3.) Check
To be fully negotiable, an instrument must contain the following:
It must be in writing and signed by the drawer or maker.
It must be made payable to the order or the bearer.
It must be payable on demand or at a future determinable time.
There must be an unconditional order or promise to pay.
Please answer “2” unless you have been familiarized with it
