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Practice Management > EXAM 2 > Flashcards

EXAM 2 Flashcards

1
Q

student loans, auto loans, mortgages, personal loans are examples of _
credit card debt is an example of _

A

pre-determined loans

not pre-determined loans

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2
Q

allocating cost of tangible/physical asset over its useful life

A

depreciation

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3
Q

money borrowed to purchase depreciating assets

A

bad debt

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4
Q

US student loan debt is the _ highest consumer debt category, behind mortgage debt

A

2nd

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5
Q

How do IRS tax brackets work?

A

you pay a baseline amount based on which tax bracket you fall into, and then a % on the amount over the minimum salary in that bracket

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6
Q

when filing taxes with the IRS, you can file _ or _

A

married separately

married joint

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7
Q

you don’t take home entire salary - (5) categories taken out for taxes:

A 
federal and state
social security
medicare
local
deductions
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8
Q

income without deductions, taxes, or other contributions

A

gross

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9
Q

income after deductions, taxes, or other contributions

A

net

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10
Q

emergency fund should be _ months worth of expenses

A

3-6, 2-3, $1000 (all stated in notes)

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11
Q

credit score is used by lenders to determine risk when _ (3)

A

starting business
buying house
buying car

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12
Q

US credit score -

Canada -

A

300-850

300-900

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13
Q

ways to determine credit scores (5):

A 
payment history
credit utilization
length of credit history
types of credit in use
new credit
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14
Q

USA credit bureaus

A

transunion
equifax
experian

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15
Q

higher your credit score = _ interest rate

A

lower

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16
Q

3 areas other than loans that use credit score:

A

landlords, cell phone, utility companies

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17
Q

assets can be used as collateral by a lender in a _ loan

A

secured

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18
Q

an asset a borrower offers to a lender to secure a loan

A

collateral

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19
Q

original sum of money borrowed in a loan

A

principal

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20
Q

amount charged as a percentage of a principal

A

interest rate %

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21
Q

the interest rate plus other costs (origination fees, charges, closing costs, discount points)

A

annual percentage rate (APR) %

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22
Q

1st day after you miss a payment on your loan

A

delinquency

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23
Q

if you are more than _ days delinquent on student loans, they will report to 3 national credit bureaus

A

90

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24
Q

failure to pay interest on principal on a loan to the agreed terms

A

default

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25
Q

combining multiple loans into one loan, usually weighted average of your interest rates

A

consolidate

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26
Q

taking new loan to pay off existing loans and combining them into one, usually to seek better interest rates and repayment terms

A

refinance

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27
Q

agreement between student and lender to reduce/postpone repayment of a student loan for a designed period (INTEREST MAY OR MAY NOT ACCRUE)

A

deferment

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28
Q 
agreement between student and lender to reduce/postpone repayment of a student loan for a 
designated period (INTEREST STILL ACCRUES)
A

forbearance

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29
Q

no longer required to make payments on your loans due to your job () or circumstances such as disability ()

A

forgiveness, cancellation

discharge

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30
Q

your gross income minus deductions (adjustments) that are used to determine your taxable income

A

AGI - adjusted gross income

things you can take out pre-taxed:
-HSA, student loan interest, 401k contribution

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31
Q

AGI minus 1.5x poverty guidelines for your family size: _

use?

A
  • discretionary income and loans

- lenders use it to show how much money you have to spend after your obligations

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32
Q

made eligible to undergrads with financial need, interest is paid while you’re in school and 6 months after

A

direct subsidized loans

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33
Q

made eligible to undergrad, grad, and professional students - don’t need to demonstrate financial need, school determines how much, INTEREST ACCRUES while in school

A

direct unsubsidized loans

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34
Q

made eligible to grad or professional degrees - can borrow up to cost of attendance

A

grad plus loan

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35
Q

loan for those with exceptional financial need

-school is lender, not all participate

A

Perkins loan

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36
Q

loans that I have:

A

direct subsidized (5.05%), direct unsubsidized (5.05%), HPL (5%)

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37
Q

payments are a fixed amount that ensures your loans are paid ff within 10 years

A

standard repayment

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38
Q

payments are lower at first and increase, usually every 2 years, and are for an amount that will ensure your loans are paid off within 10 years

A

graduated repayment

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39
Q

payments may be fixed or graduated, and will ensure your loans are paid off within 25 years

A

extended repayment

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40
Q

reduce monthly payment amount to make debt more manageable

A

income-driven repayment plans

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41
Q

PAYE - pay as you earn:
_% of discretionary income
period of _ years
_ required

A

10
20
partial financial hardship

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42
Q 
REPAYE - revised pay as you earn:
_% of discretionary 
_years if all undergrad; _years if any are grad/professional
_ required
_ is eligible
A

10
20; 25
NO partial financial hardship required
any direct loan borrower

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43
Q

income-based retirement (IBR):
_% of discretionary income
repayment period _

A

10-15

20-25

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44
Q

income-contingent repayment (ICR):
lesser of _% discretionary income OR what you’d pay in fixed over _ years
repayment period: _

A

20; 12

25

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45
Q

forgives remaining balance of direct loans after 120 qualifying payments under qualifying plans while working for a qualifying employer

A

Public Service Loan Forgiveness

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46
Q

the amount of money insurance company charges to provide coverage

A

premium

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47
Q

amount of money the policyholder agrees to pay before insurance company covers a loss

A

deductible

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48
Q

person designated to receive proceeds of insurance policy

A

beneficiary

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49
Q

additional benefits of an insurance policy provided at an additional cost

A

rider

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50
Q

creditors will often require _ for a business loan

A

life insurance

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51
Q

partners may want _ to purchase share in event of death

A

life insurance

52
Q

pays specific lump sum to loved ones, specified period of time

A

term life insurance

53
Q

both death benefit and premium are fixed

A

level term (majority of policies)

54
Q

coverage decreases over life of the policy at a predetermined rate

A

decreasing term

55
Q

life insurance mostly used for personal asset protection (small business protection)

A

decreasing term

56
Q

with decreasing term, premiums are usually _, and reductions usually occur _

A

constant; monthly or annually

57
Q

one year term policy
-premiums start _
good for _

A

yearly renewable term
low and increase
young people

58
Q

not worth anything at the end of the term if not used

A

term life points

59
Q

coverage for whole life

A

permanent life (cash value insurance or whole life)

60
Q

with permanent life, there are typically 2 parts:

A

savings/investment - can be used for medical expenses or child’s college
insurance/death benefit

61
Q

coverage throughout life and savings can grow at guaranteed rate (like savings account)

A

whole/ordinary life (most common permanent life policy)

62
Q

permanent life that offers savings element in addition to death benefit, but offers different types of structures based on market performance

A

universal/adjustable life

63
Q

combines death protection with a savings account that an be invested in stocks, bonds, and money market mutual funds

A

variable life

64
Q

combines features of universal and variable life insurance

  • risk/reward of variable
  • adjust premiums and death benefit with universal
A

variable-universal life

65
Q

1/_ of 20 year olds will be out of work for at least a year from a disabling condition before they reach retirement age

A

4

66
Q

private disability insurance plans can expect to replace _% of income

A

50-70

67
Q

disability where you are unable to perform the duties of any occupation

A

any occupation

68
Q

disability where you can’t do principal duties f your own occupation

A

own occupation

69
Q

same requirements as own occupation, but the definition of disabled included people not working at the time of their disablement

A

modified own occupation

70
Q

pays if the insured has loss of income due to illness or injury

A

loss of income disability

71
Q

waiting period before you can receive benefits after suffering injury/illness

A

elimination period

72
Q

short term vs long term coverage for disability insurance

A

3-6 months; longer, can be up to 65 or even life

73
Q

HSA

A

put money in tax free

74
Q

FSA

A

must utilize before end of the year or it is gone

75
Q

SMART goals:

A

specific, measurable, achievable, results, time

76
Q

100% of investment is guaranteed

A

principal guaranteed

77
Q

large % of investment is put in cash, short-term money market securities, and government backed securities

A

principal secure (does not guarantee the principal or interest)

78
Q

higher returns over medium to long term, market fluctuations can cause negative returns

A

growth, balanced and income funds

79
Q

a share of ownership of a company

A

stocks

80
Q

an interest-bearing security with a maturity date

A

bonds

81
Q

variety of investments, not just one company

A

mutual funds

82
Q

process of allocating funds between stocks, bonds, and cash equivalents so investment returns can be maxed for a given set of income sources, anticipated expenses and retirement goals

A

asset allocation

83
Q

income paid out as interest or dividends, divided by current price of investment

A

yield

84
Q

% measure of how much a capital asset gains or loses in value over time

A

capital gains or losses

85
Q

how easy it is to turn asset into cash

A

liquidity

86
Q

roth IRA:

no age restriction for contribution; grows tax free, withdrawals are not taxed (unlike _ IRA)

A

traditional

87
Q

person pension plan deducted from salary

A

401k

88
Q

options for certain tax-exempt organizations

-enters pretax, grows tax-deferred, taxed on withdrawal

A

403b

89
Q

number of years it takes to double your investment

A

rule or 72

90
Q

calendar year vs fiscal year

A

jan 1 - dec 31

12 consecutive months ending on the last day of any month except december

91
Q

cash accounting:
receipts are recorded when _
expenses are recorded when _

A

received

paid

92
Q

for cash accounting:

procedure done in December, paid by insurance in January

A

recorded for January

record on accounts receivable for December

93
Q

revenue and expenses are recorded when they are incurred

A

accrual accounting

94
Q

you cannot use cash accounting if you _

A

maintain inventory, are a corporation, gross receipts >5 million

95
Q

accrual accounting is beneficial for _

A

to see if you want to buy or sell practice, showing progress

96
Q

cons of accrual accounting, you may pay taxes on _

A

money you don’t receive if pts dont pay their bills

97
Q

business tangible vs intangible assets

A

tangible - building furniture, equipment

in-noncompete, goodwill

98
Q

investment of capital, to acquire property/equipment that has useful life of more than 1 year or to make permanent improvements that increases value

A

capital expenditure

99
Q

smaller purchases that don’t have a useful life of more than a year

A

deductible expense

100
Q

spreading cost of tangible asset over time of more than one year

A

depreciation

101
Q

paying off debt of intangible (debt) asset with a fixed payment schedule

A

amortization

102
Q

capital expenditures cannot be deducted all at once; must be done through _ or _

A

depreciation of amortization

103
Q

assets =

A

liabilities (debts) + owners equity (net worth)

104
Q

consumed or exchanged for cash within one year or less (cash, accounts receivable, inventory)

A

current assets

105
Q

consumed or exchanged for cash not within one year (property, plant, equipment)

A

fixed assets

106
Q

book vs market value?

A

book - what you paid

market - what it is actually worth

107
Q

expected to be paid in one year or less (accounts payable, salaries, loan payments)

A

current liabilites

108
Q

not expected to be paid in one year (loans)

A

long-term liabilities

109
Q

residual difference between assets and liabilties

A

owners equity

110
Q

prepaid vs accrued expenses

A

prepaid - paid, but haven’t used it yet (auto insurance)

accrued - used, but haven’t paid it yet (employee wages)

111
Q

amount earned from providing services and goods

A

revenues

112
Q

amount incurred to provide services and goods

A

expenses

113
Q

difference between net sales and cost of goods sold

A

gross profit

114
Q

net profit =

A

revenue - expenses

115
Q

working capital =

A

current assets - current liabilities

116
Q

current ratio:

A

business’ liquidity or cash position:ability to satisfy short-term debt (2:1)
currents assets/current liabilities

117
Q

quick ratio (acid test):

A 
compares most liquid assets to current liabilities (1:1)
current assets (less inventories)/current liabilities
118
Q

debt to owner’s equity:

A

measures financial leverage (1:1)

total liabilities/ owner’s equity

119
Q

inventory turnover ratio:

A

how many times inventory is sold/replaced in time period

COGS/average inventory

120
Q

gross profit margin (percentage):

A

source for paying additional expenses (70%)

gross profit/revenue (sales)

121
Q

income margin (percentage):

A

income as percentage of gross sales (at least 27%)

net income/ sales

122
Q

projections for the next year

A

pro forma

123
Q

professional break even point, only considering services

A

chair cost

professional overhead/practitioner hours

124
Q

chair cost per patient

A

fixed costs/ # of complete exams = amount you need to make to break even

125
Q

chair cost per hour

A

fixed cost / number of hours worked seeing patients

Practice Management (1 decks)

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