Unit 2 Flashcards
(117 cards)
1
Q
Adjusted Gross Income (AGI)
A
Income amount reported on Form 1040 after applying allowed deductions.
2
Q
Agility Skill
A
The ability to adapt in a changing environment to achieve desired results.
3
Q
Annual Percentage Rate (APR)
A
A broad measure of the cost of borrowing based on the annual sum of the periodic interest rates applied to the account. The APR does not consider the effect of compound growth.
4
Q
Bank Routing Number
A
The nine-digit code on the lower left of a check (in combination with a bank account number) that acts as a payment trail for transferred funds.
5
Q
Bankruptcy
A
A legal process through which an individual’s assets or income are divided among creditors and any remaining unpaid debts are forgiven.
6
Q
Basis
A
The price you pay when you buy a capital asset.
7
Q
Bonus
A
An extra payment usually based on performance or meeting certain production or sales requirements.
8
Q
Capital
A
The money used to start or expand a business.
9
Q
Capital Asset
A
Everything you own or use for personal or investment purposes.
10
Q
Capital Gain
A
Increased value of capital holdings.
11
Q
Capital Loss
A
Selling an asset for less than what you paid for it.
12
Q
Cashier’s Check
A
A check of a bank or other financial institution that can be purchased by paying the amount of the check plus a service fee.
13
Q
Certified Check
A
A personal check issued by a bank that guarantees the amount will be paid. The bank charges a fee for this type of check.
14
Q
Check
A
A written order to a bank to pay a third party (payee).
15
Q
Checking Account Reconciliation
A
The process of comparing your check register with your monthly bank statement.
16
Q
Co-Signer
A
An individual, in addition to the borrower, who will be held responsible for repayment of the debt.
17
Q
Collateral
A
The item of value that can be sold in the event that loan payments are not made by the borrower.
18
Q
Commission
A
A payment based on the sale of a product or service.
19
Q
Corporation
A
A legal business structure that is separate from the owners of the business.
20
Q
Credit Bureau
A
A company that maintains housing and credit files on consumers.
21
Q
Credit Card
A
A line of credit or a type of loan that the borrower can access at any time, make payments on the loan to decrease or pay off the balance, and borrow the money again without having to reapply for a loan from the lender.
22
Q
Credit Limit
A
The maximum amount you may borrow.
23
Q
Credit Report
A
A summarized accounting of your credit history.
24
Q
Credit Score
A
A tally that summarizes a person’s credit risk.
25
Creditor
A firm or individual from whom someone has borrowed money.
26
Cryptocurrency
A hybrid currency that acts like cash but works like P2Ps.
27
Deduction
Specific expenses allowed by Congress that can be used to offset gross income.
28
Deficit
When expenses exceed income.
29
Dividend
An investor’s share of the profits that is distributed directly to the shareholder.
30
Earned Income
Money that you receive from work whether in the form of salaries, wages, commissions, or bonuses, or for operating your own business.
31
Earnings
Compensation received for services performed for an employer.
32
Economic Life Span
How wealth rises and diminishes over time.
33
Effective Tax Rate
Measures the average tax an individual pays on his or her entire income.
34
Electronic Transaction
Payments made at the time of a purchase and transfers of money from one account to another.
35
Endorsement
Your signature.
36
Exclusion
A type of income that is excluded from gross income and not calculated in determining the tax base.
37
Face Value
The amount from a life insurance policy that will be paid in the event of death.
38
Fair Credit Reporting Act
Requires Equifax, Experian, and TransUnion to provide you with a free copy of your report once every 12 months.
39
Fair Labor Standards Act
Passed in 1938, legislation designed to protect those paid by the hour, such as imposing minimum wage requirements on employers.
40
Federal Insurance Contributions Act (FICA)
Tax used exclusively to pay for Social Security and Medicare.
41
Filing Status
Determined by your marital status and the presence of dependents.
42
Finance Charge
The total amount of fees and interest charged by the lender for a loan.
43
Fixed Installment Loan
Lending contracts wherein the lender agrees to loan the borrower a certain amount of money at a set interest rate for a set time period. In turn, the borrower agrees to repay the money through fixed monthly payments that will not change during the life of the loan.
44
Foreclosure
When the lender takes back the house after you fail to make payments.
45
Fraud
When another person intentionally steals from you.
46
Fraud Protection
Assistance in case a prepaid card is lost or stolen.
47
Garnish Wages
A court order to have the borrower’s employer pay a portion of the borrower’s wages directly to a creditor.
48
General Partnership
Form of legal business structure operated by two or more individuals where decision making is typically made by the majority.
49
Gross Pay
Total amount of earnings before taxes and other deductions are considered.
50
Identity Theft
Occurs when someone else uses your personal information, such as your name and Social Security number, to obtain credit.
51
Income
A broad term used to describe all sources of money obtained by individuals and households that can be spent or saved.
52
Independent Contractor
An individual who enters into an agreement with other businesses and individuals to perform specific tasks or functions but is not considered an employee.
53
Installment Credit
A type of loan in which a borrower makes a series of payments, typically equal in amount, to the lender over a predetermined period of time.
54
Internal Revenue Service (IRS)
A government agency within the U.S. Department of the Treasury that is charged with collecting taxes and enforcing tax laws passed by Congress.
55
Investor
Someone who allocates resources to assets in the hope of making money.
56
Lien
Gives the lender the legal right to sell the collateral if the borrower does not repay the loan.
57
Limited Liability Company (LLC)
A legal business structure that shields the personal assets of the owner(s) from the liabilities of the business.
58
Loan Term
The length of time a borrower has to repay the loan.
59
Long-Term Capital Gains
Produced by selling assets (such as real estate or stock) that you have owned for more than one year for a profit.
60
Marginal Tax Rate
The rate of change in tax resulting from a change in income or deduction. In simpler terms, your marginal tax rate is the tax rate paid on your last dollar of income.
61
Minimum Wage
Federal and state regulations that determine the minimum amount that can be legally paid to an employee.
62
Money Order
A prepaid check purchased from a bank, credit union, or convenience or grocery store.
63
Negative Effective Tax Rate
The result when refundable tax credits exceed an individual’s total tax.
64
Nonrefundable Tax Credit
Tax credits that can reduce an individual’s assessed tax to zero but cannot make it negative (where the federal government owes the taxpayer money).
65
Open-End Credit
Preapproved loan between borrower and financial institution that may be used frequently up to a certain credit limit and can be paid back earlier.
66
Ordinary Income
Income derived from work, interest, self-employment, retirement plan distributions, rents, royalties, and other sources of earned income.
67
Overdraft
Writing a check for an amount greater than your account balance
68
Overdraft Protection
A bank service that allows someone to spend more than their account balance.
69
Overtime
Working more than 40 hours in one week.
70
Peer-to-Peer Payment (P2P)
Apps that allow you to transfer money from your bank to someone else in your personal network.
71
Prepaid Card
Money loaded onto a debit card in advance that can then be used to make payments in the future.
72
Problem Solving Skill
The ability to define problems clearly, explore ideas, and create effective, ethical, and evidence-based solutions.
73
Productivity Skill
The ability to strategize, organize, and plan to best manage your priorities and time.
74
Property Tax
A tax imposed by a local municipality or state, which is based on the value of the property.
75
Qualifying Children
Dependents of a taxpayer who must pass four general tests: support, age, relationship, and abode.
76
Qualifying Relative
A dependent who is not a qualifying child of another person, but meets other requirements to be lawfully recognized as a dependent.
77
Realized Gain
When an investment is sold for a higher price than what it was purchased for.
78
Refundable Tax Credit
A tax credit that reduces the amount of tax someone must pay. If the credit exceeds the tax liability, the difference can also be received directly by the taxpayer.
79
Repossess
When assets that were used to secure a loan are taken by the lender because the loan was unpaid.
80
Revolving Credit
A loan that may be accessed, repaid, and used again indefinitely.
81
Reward Credit Card
Credit cards that provide benefits linked to how much is purchased with the card. These benefits can include cash back, airline and hotel travel points, and other valuable benefits.
82
Salary
Payment for work for a set period of time, usually an annual amount.
83
Sales Tax
A tax that is imposed by state and local governments on the sale of certain goods and services.
84
Savings Ratio
The percentage of income that you are setting aside on a regular basis (Savings Ratio = Savings ÷ Income).
85
Secured Credit Card
Requires the borrower to deposit the full amount of the line of credit at the bank as collateral before the credit card is issued.
86
Secured Debt
Money borrowed to buy things like cars and homes. These secured assets can be taken back by a lender if the debt is not repaid.
87
Self-Employed
Earnings come from a business that you operate.
88
Service Charge
A reasonable monthly fee charged by any financial institution to use its services.
89
Sole Proprietorship
The default legal business structure of a self-employed individual
90
Surplus
The money left over after all expenses have been paid.
91
Targeted Savings Rate
The savings ratio (Savings ÷ Income) applied over a specific time period.
92
Tax
A financial obligation imposed on individuals and businesses by government entities.
93
94
Tax Base
The amount of money that will be taxed, which is generally based on the cost of the item you purchase.
95
96
Tax Bracket
A predefined range of taxable income in which a single tax rate applies.
97
98
Tax Bracket Tax Rate
The predetermined rate at which income or property is taxed. In the United States, tax rates are broken into different brackets, which represent the level of taxation due on income within a bracket.
99
100
Tax Credit
A dollar-for-dollar reduction in an assessed tax liability.
101
102
Tax Rate
Used to calculate the amount of tax owed and is generally denoted as a percentage rate.
103
104
Tax Return
Information that a taxpayer compiles and reports to the IRS on a standardized form.
105
106
Taxable Income
The amount remaining after the standard deduction or itemized deductions. It is your tax base used to determine your income tax.
107
Technology Skill
The ability to confidently and efficiently use technologies to complete goals and tasks and maintain a competitive advantage.
108
Total Debt-to-Income Ratio
The percentage of your income that you are spending to pay down your debts.
109
Total Income
The combination of earned and unearned income.
110
Travel and Entertainment Card
Credit cards that typically require cardholders to pay off their balance on a monthly basis, such as American Express® and Carte Blanche®.
111
Traveler’s Check
A prepaid check purchased from a credit card company, bank, or credit union that must be signed before it can be cashed.
112
Unearned Income
Money you receive from sources other than work or labor
113
Unlimited Liability
Having total responsibility for the losses associated with a negative event
114
Unsecured Debt
Money borrowed to purchase goods and services that are generally consumed quickly, such as using your credit card to buy groceries.
115
Variable Installment Loan
Loans in which debt repayments can fluctuate from one period to another.
116
Wage
What an employer will pay an employee to work.
117
Withholdings
Taken out of an employee’s pay by the employer. Some withholdings are mandated by law, whereas other withholdings are elected by employees.
