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Flashcards in midterm - chapter 12 Deck (68)
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1

covers social security and medicare taxes

FICA

Federal Insurance Contributions Act

2

how often employees are paid

pay period

3

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

accounts receivable record

4

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

ex. short term loans from a bank, accounts payable

current liabilities

5

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

budget

6

What is the purpose of payroll taxes?

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

7

  • 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

balance sheet

8

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

revenue

9

assets

anything of value that a business OWNS

10

the assets with a lifespan of more than a year

ex. land, buildings, equipment and expensive technology

long term assets

11

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

start up budget

12

liabilities

amounts that a business OWES

13

extra money only available to certain employees

commissions, bonuses, profit sharing

14

what is the accounting equation?

assets = liabilities + owner's equity

or

assets - liabilities = owner's equity

15

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

net loss

16

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

income statement

17

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

direct deposit

18

employees are either paid a salary or an hourly rate

regular earnings

19

How is profit calculated?

What is the basic financial equation?

Revenue - Expenses = Profit or Loss

20

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

financial records

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

21

What are the 4 steps in budgeting process?

  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

22

  • 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

accounts payable

23

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

current assets

24

expenses that only happen once in awhile

periodic expense

ex. car repairs, Christmas bonus, car registration

25

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

start up budget

26

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

accounts receivable

27

What is the purpose of a balance sheet?

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

28

What are the 3 types of budgets?

  1. start up budget
  2. operating budget
  3. cash budget

29

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

social security tax

30

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

operating budget