Unit 5 personal finance

Entrepreneur one who opens a new business
Probable operating costs The amount of money required to keep a business running
Private money may be offered to clients when banks find the risk too high
What are start-up costs associated with opening a business? equipment, legal fees/licensing
Creative financing a non-traditional means of real estate financing, or financing techniques not commonly used by real estate investors
OPM Other people’s money
Term loan generally, a loan obtained from a bank
Types of retail bank Private, offshore and ethical
Merchant banks Traditionally banks which were engaged in trade financing
Examples of an unsecured bank loan Credit card debtBank overdraftsCorporate Bonds
Core modules of accounting Accounts receivableAccounts payablePurchase orders
General ledger Nominal ledger
Basic Accounting categories Asset, gains, losses
Trial balance The listing of the amount names and the sum of the account balances
What should be included in a general ledger? Date, description, total amount for each account
Income statement Profit and loss statement
Cash flow statement Shows how changes in balance sheet and income accounts affected cash and cash equivalent
snapshot balance sheet of a company’s financial condition on a given date
What is the purpose of an income statement? To show managers and investors whether the company made or lost money during the period of being reported
Deductions Taxes, insurance, and saving plans deducted from a paycheck
Methods of paying employees Commission, hourly rate, and salary
Hourly rate type of payment where an employee is only paid for the hours worked
Salary A payment amount that is paid yearly, and is then divided into weekly, biweekly or monthly payments throughout the year
standard deductions Deductions that are untaxed
Withholdings The amount of an employee’s income that an employer sends directly to federal, state or local tax authority
Specific required deductions Social security, medicare, federal, and state taxes
Voluntary deductions health insurance, retirement plans, life insurance, and stock purchase plans
Payroll register Provides a summary of the payroll information for each pay period

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