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Financial Literacy > Accounting Info > Flashcards

Accounting Info Flashcards

(60 cards)

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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
Stock expressed - Book value
The firms owners equity divided by the # of common shares owned by shareholders
26
Dividend
A payment to shareholders from the company’s earnings
27
Blue Chip Stock
A common stock issued by a respected company with a stable pattern of dividend payouts
28
Mutual Funds
Company that pools cash investments from individuals and organizations to purchase a portfolio of stocks, bonds, etc... Cannot be traded like a stock.
29
No loan fund
Not charged sales commissions when they buy or sell funds
30
Loan fund
Investors are charged sales commission when they buy or sell funds
31
Exchange Traded Funds (ETF)
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
Advantages of ETF’s over Mutual Funds
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
Trading securities
Stocks, bonds, mutual funds are known as securities because they represent secured claims by investors
34
Security Markets
Markets in which stocks and bonds are sold
35
Primary Security Markets
New stocks and bonds are sold and bought by firms and governments
36
Securities & Exchange Commission
Government agency that regulates U.S. security markets
37
Investment bank
Financial institution that specializes in issue it and reselling new securities
38
Investment banking services
1. Advise companies 2. Buy and assume liability for new securities 3. Create distribution networks
39
Second security market
Market in which stocks are sold to the public
40
Stock exchange
Institutional auction setting in which stocks can be bought and sold - buyers can use NYSE’s Direct service to automatically conduct trades electronically
41
Stock broker
Executes buy/sell orders on behalf of customers in return for commission - brokers offer clients consulting advice in personal financial planning/strategies
42
Dow Jones Industrial Average
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
S & P 500
Market index of U.S. equities based on the performance of 500 large cap stocks
44
The Russel 2000 index
Index that uses 2000 stocks to measure the performance of the smallest U.S. companies
45
Calculating Total Return from investment
(Current dividend payment + capital gain)/ (original investment) multiplied x100 = Total Return (%)
46
Secured Loan
The borrower guarantees repayment of the loan by pledging the asset as collateral
47
Collateral
Asset pledged for the fulfillment of repaying a loan | - banks gains possession of pledged assets
48
Annual Percentage Rate (APR) - one year rate that is charged for borrowing
One year rate that is charged for borrowing
49
Unsecured Loan
Loan for which collateral is not required | - requires good credit history
50
Maturity date
Future date when repayment of a bond is due from the borrower
51
Face Value
Amount of money that the bond buyer (lender) lent the issuer and that the lender will receive on repayment
52
Default
Failure of borrower to make payment when due to a lender
53
Gross profit
Firms revenue - cost of revenues
54
Operating Expenses
Costs other than the costs of revenues
55
Net Income
Gross Profit - Operating expenses and income taxes
56
Income Statements
“Profit and loss statements” | - description of revenues and expenses
57
Earnings per share
Net Income divided by # of shares of common stock | - used to either buy or sell the firms stock
58
Return on Equity
Annual net income / stockholders equity
59
Pension Fund
No deposit pool of funds managed to provide retirement income for its members
60
Du Pont Analysis
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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