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Finance chapter 1-2
Terms in this set (55)
A method to evaluate a situation in advance by comparing the expected costs with the expected positive results. (Costs are not always but can be the impact on people, the environment, etc).
A benefit or cost that influences decision making.
Medium Of Exchange
A function of money that means it will be accepted as payment for goods or services.
Anything that serves as a medium of exchange, a store of value and a unit of measure.
Goods and services that an individual must have to survive; e.g. food, clothing, shelter, etc.
The cost of passing up the next best alternative when making a decision.
The basic economic situation- limited resources and unlimited wants.
Store Of Value
A function of money that provides for the transfer of today's purchasing power to a future time.
Giving up one want in order to satisfy another.
Unit Of Measure
A function of money that measures the value of goods and services.
Goods and services that an individual would like to obtain; e.g., an upgraded computer, a sports car, dance training, etc.
Information on this form determines the amount your employer will withhold from your paycheck for income taxes.
Reductions in the amount of tax withheld from your paycheck; more you claim the less tax you will have withheld.
Are available only to people who will not earn enough in the year to owe any federal income tax.
Given to you from the year from the employer you worked for summary of the income you earned during the year and all tax amounts withheld.
Legally your employer must provide this to you by January 31.
Employment eligibility verification form; verify the employee's identity and eligibility to work in the U.S.
Social Security Act
Social insurance program that provides federal aid for the elderly and for disabled workers and Medicare Insurance for those 65 and older.
Are those who have lost a job from no fault of their own.
Fair Labor Standards Act
Aka Wage and Hour act, Which establishes a minimum wage and overtime wages of 1.5 times their hourly wage.
An insurance program that pays benefits to workers and or their families for injury, illness, or death as a result of the job.
The Family and Medical Leave Act
Allows employees to take up to 12 weeks of unpaid leave in a 12 month period for certain medical and family situations; i.e. childbirth, serious health condition, care of a family member.
Laws Against Discrimination
i.e. age, equal pay, civil rights, disabilities.
The total amount you earn before any deductions are subtracted.
Rate x Hours Worked=Gross Pay.
Regular Pay + Overtime Pay = Gross Pay.
Gross pay=salary pay: annual amount: divided up into periods through the year; i.e. weekly and monthly.
Are the amounts subtracted from your gross pay; i.e. social security tax, Federal income tax.
Is when all deductions are taken out of your gross pay, net pay is the amount left "Take-home Pay"
Regular Pay (Wages or Salary) + Overtime Pay = Gross Pay, Gross Pay - Deductions = Net Pay.
Plan that allows employees to receive a portion of the company's profits at the end of the corporate year; AKA incentive pay: money offered to encourage employees to strive for higher levels of performance.
Year to date.
Extras that companies offer in order to improve employee morale and working conditions.
Bonuses And Stock Options
Stock give employees the right to buy a set number of shares of the company's stock at a fixed price.
For retirement funded by employer; when you retire you receive a monthly check; employees become vested (entitled to the full retirement account) after a specified period of time.
Includes 401 (k) for private or 403 (b) for government employers; employers do not bear the full cost and employees must contribute to the employee's account.
Type of work schedule that allows employees to choose their working hours.
A group of people who work in the same or similar occupations, organized for the benefit of all employees in these occupations.
Consists of people in a particular occupation that requires considerable training and specialized skills; i.e. American Bar Association for lawyers.
Money collected through taxes from taxpayers that is paid to the government; it is then spent as based on the priorities set by Congress.
Ability to Pay Principle
Those with high incomes should pay more in taxes than those with low incomes.
Take a larger share of income as the amount of income grows; i.e. Federal income taxes: low income pays 15% and higher income pays 28%.
Take a smaller share of income as the amount of income grows; i.e. Sales tax at 6%.
(Aka flat taxes) Taxes for which the rate stays the same regardless of income: i.e. property taxes all pay the same tax rate.
Internal Revenue Service; an agency of the Dept. of Treasury; to collect income taxes and enforce tax laws.
Power To Tax
Power to levy taxes rests with Congress.
Paying Your Fair Share
Our system is Graduated; tax rates increase as taxable income increases in relation to the six tax brackets we have.
An examination of tax returns.
Tax filing group, based on your marital status.
An amount you may subtract from your income for each person who depends on your income to live.
A person who lives with you and for whom you pay more than half his or her living expenses.
All the taxable incobme you receive; earned income money you got from working and unearned income money you got from sources other than working.
From bank accounts.
Money, stock or other property that corporations pay to stockholders in return for their investment.
Adjusted Gross Income
Some types of spending that are subtracted from your gross income; i.e. contributions to individual retirement accounts, student loan interest and tuition and fees; subtracted from your gross income to determine your AGI.
Expenses you can subtract from adjusted gross income to determine your taxable income; the lower your taxable income goes the less taxes you have to pay i.e. property taxes, home mortgage interest, gifts to charity.
Any amount subtracted directly from tax owed.
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