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Intro to Business > midterm - chapter 12 > Flashcards

midterm - chapter 12 Flashcards

1
Q

covers social security and medicare taxes

A

FICA

Federal Insurance Contributions Act

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2
Q

how often employees are paid

A

pay period

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3
Q

identifies customers that made purchases using credit and the status of each account

A

accounts receivable record

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4
Q

amounts owed by the business that will be paid within a year

ex. short term loans from a bank, accounts payable

A

current liabilities

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5
Q

detailed plans for the financial needs of individuals, families and businesses

A

budget

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6
Q

What is the purpose of payroll taxes?

A

to fund government projects like roads, schools, parks, etc

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7
Q
  • shows the company’s assets, liabilities and owner’s equity as of a specific date
  • a report that lists a company’s assets, liabilities and owner’s equity at a specific point in time
A

balance sheet

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8
Q

all income that a business receives over a period of time; the money the company is making

A

revenue

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9
Q

assets

A

anything of value that a business OWNS

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10
Q

the assets with a lifespan of more than a year

ex. land, buildings, equipment and expensive technology

A

long term assets

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11
Q

budget that plans income and expenses from the beginning of a new business or expansion until it becomes profitable

A

start up budget

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12
Q

liabilities

A

amounts that a business OWES

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13
Q

extra money only available to certain employees

A

commissions, bonuses, profit sharing

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14
Q

what is the accounting equation?

A

assets = liabilities + owner’s equity

or

assets - liabilities = owner’s equity

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15
Q

the result of expenses being greater than income; another term for loss

A

net loss

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16
Q

a report of revenue, expenses and net income or loss from operations for a specific period

A

income statement

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17
Q

employers transfer employees’ net pay electronically directly into their bank accounts

A

direct deposit

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18
Q

employees are either paid a salary or an hourly rate

A

regular earnings

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19
Q

How is profit calculated?

What is the basic financial equation?

A

Revenue - Expenses = Profit or Loss

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20
Q

financial documents that are used to record and analyze the financial performance of a business

A

financial records

ex. a/p record, a/r record, depreciation record

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21
Q

What are the 4 steps in budgeting process?

A
  1. prepare a list of each type of income and expense that will be part of budget
  2. gather accurate info from business records and other sources for each type of income and expense
  3. create the budget by calculating each type of income, expense and the amount of net income or loss
  4. explain the budget to people who need financial info to make decisions
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22
Q
  • a financial document that identifies the companies from which credit purchases were made and the amount purchased, paid and owed
  • payments to other vendors (businesses) that will be paid at a later date
A

accounts payable

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23
Q

cash and those items that can be readily converted to cash such as inventory and accounts receivable

A

current assets

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24
Q

expenses that only happen once in awhile

A

periodic expense

ex. car repairs, Christmas bonus, car registration

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25
Q

a budget that plans income and expenses from the beginning of a new business or a major business expansion until it becomes profitable

A

start up budget

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26
Q

a financial document that identifies customers that made purchases using credit and the status of each account; amounts the customers owe the company

A

accounts receivable

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27
Q

What is the purpose of a balance sheet?

A
  • to help determine how business is performing
  • shows how much the business is worth on the date its prepared
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28
Q

What are the 3 types of budgets?

A
  1. start up budget
  2. operating budget
  3. cash budget
29
Q

a tax paid by BOTH employees and employers to the federal government, it’s used to pay for retirement benefits, widows and disability benefits

A

social security tax

30
Q
  • the financial plan for the ongoing operations of the business
  • covers 3 months, 6 months or a year
A

operating budget

31
Q

What is shown on income statement?

A
  • revenue
  • expenses
  • net income or loss
32
Q

example of payroll taxes

A
  • income tax
  • state tax
  • social security
  • medicare
  • unemployment tax
33
Q

a tax by the state government on an employee’s income; employers withhold this amount each pay period and pay it directly the the state government

A

state income tax

34
Q

expenses that change every month

A

variable expenses

ex. electric bill, phone bill, food

35
Q

What are the goals of a business budget?

A
  • to determine the sources and amounts of income
  • to identify the types of expenses and predict their costs
  • to determine how income will be distributed to cover those expenses
  • to reward investors if there is a profit
36
Q

only available for hourly employees; 1-1/2 times regular pay rate for hours worked over 40 hours in one week

A

overtime earnings

37
Q

the result of revenue being greater than expenses; another term for profit

A

net income

38
Q

What is the purpose of the income statement?

A

to determine how business is performing

39
Q

What are the main purposes of a business budget?

A
  • anticipate sources and amounts of income for a business
  • predict the types and amounts of expenses for a specific business activity or the entire business
40
Q

the value of the business after liabilities are subtracted from assets; the value of the owner’s investment in the business; what the business is worth

A

owner’s equity

41
Q

a report of revenue, expenses and net income or loss from operations for a specific period; prepared every 6 months or 1 year

A

income statement

42
Q

the financial record of employee compensation, deductions and net pay

A

payroll

43
Q

required federal and state payments for each employee

A

payroll taxes

44
Q

money withheld from employee’s paycheck to cover medical insurance costs, retirement plan contributions, dental insurance, etc

A

payroll deductions

45
Q
  • printed with paychecks
  • shows information for current pay period and cumulative amounts for the year
  • shows number of hours worked and hourly wage rate or salary amount, vacation or sick days used, each tax withheld, all deductions withheld, etc
A

earnings report

aka pay stub

46
Q
  • budget that shows an estimate of the actual money received and paid out for a specific period
  • covers each week or month
  • includes sales, rent, electricity, income, etc
A

cash budget

47
Q

business expenses are greater than income

A

net loss

48
Q

identifies the companies from which credit purchases were made and the amounts purchased, paid and owed

A

accounts payable record

49
Q

What information is contained in a payroll record?

A

employee name, address, social security number, salary or wage info, vacation and sick days, tax info, etc

50
Q

a tax paid by BOTH employees and employers to the federal government and is used to pay for Medicare benefits for citizens 65+ or with certain disabilities

A

Medicare tax

51
Q

expenses that are the same every month

A

fixed expenses

ex. rent, mortgage, insurance premiums

52
Q

What is shown on balance sheet?

A
  • current assets
  • long term assets
  • current liabilities
  • long term liabilities
  • owner’s equity
53
Q
  • things that cost a company money, such as salaries, utilities, insurance, etc
  • costs of operating a business
A

expenses

54
Q

What is the difference between gross pay and net pay?

A
  • gross pay is the amount an employee earns BEFORE taxes and deductions are taken out
  • net pay is the employee’s ‘take home pay’ and is AFTER taxes and deductions are withheld
55
Q

a tax by the federal government on an employee’s income; employers withhold this amount each pay period and pay it to the government

A

federal income tax

56
Q

business debts that will continue for longer than a year

ex. loan on land, buildings or equipment

A

long term liabilities

57
Q

documentation used to process earnings payments and record each employee’s pay history

A

employee payroll records

58
Q

What factors influence income?

A
  • education - college or technical training
  • number of years of experience
  • where you live
  • type of job (entry level or management)
  • type of company working at
59
Q

the final ‘take home pay’ once all employee deductions and taxes are taken out

A

net pay

60
Q

a report that lists a company’s assets, liabilities, and owner’s equity at a specific point in time; prepared every 6 months or once a year

A

balance sheet

61
Q

business revenue is greter than expenses

A

net income

62
Q

a financial document used to identify the amount that assets have decreased in value due to their age and use

A

depreciation record

63
Q

costs of operating a business

A

expenses

64
Q

a budget that describes the financial plan for ongoing operations of the business for a specific period of time, typically 1 year

A

operating budget

65
Q

all income that a business receives over a period of time

A

revenue

66
Q

the total earnings for an employee during a pay period; includes regular, overtime and commission earnings

A

gross pay

67
Q

the financial record of employee compensation, deductions and net pay

A

payroll

68
Q

What are 3 types of expenses?

A
  1. fixed
  2. variable
  3. periodic

Intro to Business (41 decks)

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