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Transcript of Bluff Day 4 11 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29...
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This balance indicates the value of the owner’s investment (or share of the
business) at the beginning of the statement period. The ending capital balance of a
previous statement of changes in owner’s equity becomes the beginning capital
balance on the subsequent statement of
changes in owner’s equity.
beginning capital balance
This balance indicates the value of the owner’s investment (or share of the
business) at the end of the statement period. This amount needs to be compared with the
owner’s equity balance on the balance sheet.
ending capital balance
A statement that portrays the assets the owner invested (contributed or put in), how much he
withdrew (took out), and how much net income the company generated during a certain statement
period. It represents how the value of the owner’s share of the business increased or decreased for a
period of time.
statement of changes in owner’s equity (SCOE)
Assets expected to be used up within the business’s fiscal year.
current assets
Liabilities expected to be paid within the business’s fiscal year. Includes the current portion of
long-term liabilities.
current liabilities
Current assets ÷ current liabilitiesA liquidity ratio used usually to
analyze unhealthy companies. It is an indication as to whether a
company is able to meet its short-term obligations.
current ratio
Liabilities expected to be paid after the fiscal year.
long-term liabilities
Current assets – current liabilitiesAn indication of liquidity that shows how
much of a cushion there is to pay short-term bills. In case all the expected income doesn’t
materialize, there need to be some short-term assets available to cover the short-term
liabilities.
working capital
A person (or company) who lends money or capital with the intent of
being repaid with interest.
creditor
A stakeholder who has a vested interest in the business, including
managers, investors, and creditors.
decision maker
A person (or company) who becomes part owner by investing money or capital with the intent of
earning a return on the investment.
investor
A person who helps steer the direction of the company and
reports to the owner. manager
The process of predicting revenue and expenses for comparison purposes. If
expectations aren’t met, then an investigation may take place to reveal the
cause of the discrepancy. Conversely, budgeting is planning for each dollar received so the money can be used
effectively and overspending does not occur.
budgeting
Policies and procedures companies follow to safeguard
their assets. controls
The practice of obtaining an insurance policy that guarantees reimbursement to a company for
a loss sustained as a result of certain dishonest behaviors in
workers. employee bonding
Policies and procedures companies follow to safeguard
their assets from employee theft. internal controls
Different people take turns doing the same job so that a fresh pair
of eyes may notice discrepancies.
rotation of duties
People in jobs who handle cash, inventory, or other assets who
are different from the people who account for those assets. The same can be said of liabilities.
segregation of duties
A type of financial institution, usually a corporation, charted by a state or federal government, that offers many services, including, for example, making loans;
investing in securities; holding depositors’ money in individual
accounts, honoring demands for payment against those accounts, and paying interest on them; and issuing
drafts and cashier’s checks.
bank
A kind of property ownership in which everyone who uses a facility is a part owner (for example, credit
unions or some types of condominiums). A cooperative is
often called a co-op.
cooperative
cooperative financial institutions in which all members (depositors and borrowers) are part owners and have a vote in leadership.
generally offer the same types of services as banks.
credit union
A firm that provides protection from the possibility of future
financial harm in exchange for periodic payments. Types of
insurance include fire, theft, and business interruption.
insurance company
Companies that specialize in selling securities (like stocks or bonds) issued by businesses.
investment firms
A firm that offers saving and loan services to its clients. It is
generally managed by a vote of its membership. Savings and
loan is often abbreviated as S&L.
savings and loan
An alternate term for a savings and loan.
thrifts
A market where the price of an item is arranged by the mutual consent of sellers and buyers.
free market
The integration among people, companies, and governments
across geographical boundaries.
globalization
To unite with something else; to form, coordinate, or blend into a
functioning or unified whole.
integration
The mutual responsibility and dependency on others.
interdependence
When companies reduce costs by transferring portions of work to outside suppliers rather than
completing it internally.
outsourcing
An insurance policy that pays benefits to the survivor of if the
policyholder is killed accidentally. Partial payments are made if the covered employee loses a body
part or sight because of an accident.
accidental death and dismemberment policy
An employer-funded retirement plan with payouts to the retiree
based on a formula that includes length of service and salary history, such as a pension.
defined benefit plan
A retirement plan in which a certain amount or percentage of money is set aside each year, by the employee or the company, or both; payouts are dependent on
the amount of contributions made. A 401(k) is a type of defined-
contribution plan.
defined-contribution plan
Insurance that pays a monthly benefit to workers who, because of injury or illness unrelated to
work, cannot do their normal job or any other job.
disability insurance
A health care arrangement under which a healthcare provider charges, and the insurance
company pays for, each service separately.
fee-for-service (FFS) plan
A work schedule that shifts working hours either earlier or
later than usual, in order to accommodate an employee’s needs outside work (such as
child care) or to avoid traveling at peak commute times.
flextime
Insurance plans that include coverage for medical care, dental
care, and vision care.
health insurance
A health insurance plan that requires its members to receive services only from its network of providers. Benefits are typically provided at 100%, less a small
($10-$20) co-payment.
health maintenance organization (HMO)
Pay an employee receives when she takes a company-sanctioned
day off from work.
holiday pay
Pay an employee receives (usually full regular salary) when absent from work because of a
summons to appear for jury duty.
jury duty pay
A policy that pays a lump sum to the beneficiary (the person named
by the policyholder to receive benefits) upon the death of the
policyholder.
life insurance
Pay an employee receives (usually full regular salary) when
absent from work to fulfill a military obligation.
military duty pay
An arrangement in which an insurer contracts with medical
care providers to furnish services at lower than usual fees in return for a certain volume of patients.
preferred provider organization (PPO)
Benefits paid for by employee deductions but not counted in the
total income taxed, such as 401(k) contributions and health-
care premiums.
pre-tax benefits
A benefit not directly related to the workplace or insurance
coverage but that makes life easier for the employee, such as
child-care subsidies, flextime, and payment of health club fees.
quality of life benefit
A plan that sets aside funds in an investment account for the
employee’s retirement years.
retirement plan
Wages paid to an employee who is absent from work for illness.
sick leave pay
A right granted to employees to purchase company stock at a set price, within a certain time period.
stock option
A work arrangement in which employees work some of the time
from a remote location using telecommunication links.
telecommuting
Company payments for tuition and/or fees for an employee to take coursework related to the
job.
work-related education assistance
A tax on business assets, such as machinery, computers,
delivery trucks, and unsold goods held for sale, paid to the county.
business property tax
Taxes on corporate income, paid to the federal government.
federal corporate income tax
Money withheld from employee salaries and paid to the federal
government.
federal employee withholding tax
Taxes imposed on goods that cross national borders.
import tax
A taxing board (such as a county or city) grants a short-term or
long-term phase-in of the required taxes, usually offered to
businesses in an urban development zone.
income tax abatement
A credit against a company’s income taxes for each employee
trained, usually offered to businesses in an urban
development zone.
job tax credit
Money for training costs provided by a governmental authority,
usually offered to businesses in an urban development zone.
job training grant
Taxes on corporate income, paid to the county or city government
(or both).
local corporate income tax
Medicare is part of the Federal Insurance Contribution Act (FICA) tax collected by the
federal government that pays healthcare benefits to retirees, the disabled, and children of
deceased workers.
Medicare
A company pays less for its property taxes than it otherwise
would, up to a maximum percentage stated by law, usually offered to businesses in an urban
development zone.
property tax abatement
Tax paid on business property, much like property taxes on a
private home.
real estate tax
Tax on goods or services, usually paid to county or city
government.
sales tax
Part of the Federal Insurance Contribution Act (FICA) tax
collected by the federal government that pays benefits to
retirees, the disabled, and children of deceased workers.
Social Security Insurance (SSI)
State taxes paid as a percentage of gross income. All businesses
that have gross revenue above a given amount must pay this tax,
not just corporations.
state commercial activity tax
State taxes paid as a percentage of corporate assets—only paid by
corporations.
state corporate franchise tax
Taxes on telephone, cell phone, or Internet use.
telecommunications tax
Taxes paid to persons filing “unemployed” after beginning as
employed. These are collected by the federal government (FUTA) and state government (SUTA).
unemployment tax
Employers pay this tax that goes, in part, into an insurance fund to
mitigate losses against employees suing for getting hurt
while on the job.
worker’s compensation