Financial Math Terms

• These flashcards cover key financial math terms and definitions relevant to accounting, finance, and business.

Adjusted Balance Method

• Calculates credit card interest based on the balance after subtracting payments and credits from the previous month's balance

Adjusted Gross Income

• Gross income minus above-the-line deductions; a tax term

Annual Percentage Rate (APR)

• The ratio of finance charges to the amount financed, expressed as a percentage

Assessed Value

• The value assigned to property for tax calculation purposes

Assets

• Items of value owned by a person or business

Average Daily Balance Method

• Applies the periodic interest rate to the average daily balance in an account during a billing period

Balance

• The amount of money in an account, or the difference between the two sides of an account

Balance Sheet

• Financial statement that shows assets, liabilities, and capital of a person or business on a specific date

Bank Discount

• Interest that is collected in advance

Bank Statement

• A monthly report from a bank to a depositor, detailing deposits, payments, and the account balance

Bankrupt

• The state of being legally insolvent and unable to pay debts

Base Period

• A period of time used for making comparisons

Benefits

• Additions to wages provided by an employer that have value

Bodily Injury Insurance

• Auto insurance that covers liability for injuries to other people

Bond Discount

• Occurs when a bond's market value is less than its par value

Bond Premium

• Occurs when a bond's market value exceeds its par value

Bonds

• Written promises to repay loaned money on a specific due date

Book Value

• Original cost of an asset less accumulated depreciation

Break-Even Point

• The point where income from sales equals the total costs of production and sales

Budget

• A plan for future spending

Capital Investment

• The original cash invested plus the cost of any improvements

Carrying Costs

• The expenses associated with holding inventory

Cash Advance

• Cash borrowed from a credit card

Cash Discount

• A discount offered for early bill payments

Cash Value

• The value of an insurance policy if canceled

Certificate of Deposit (CD)

• A savings certificate with a specified term

Closing Costs

• Fees and expenses incurred during the transfer of home ownership

Coinsurance

• When the insured and insurer share losses/costs

Collision Insurance

• Auto insurance that covers damage to the insured's vehicle

Compound Amount

• The total in a savings account after compound interest is added

Compound Interest

• Interest calculated on the principal plus accumulated interest

Consumer Price Index (CPI)

• A measure of changes in consumer prices relative to a base year

Contract Employees

• Temporary employees paid by an employment agency

Cost of Goods Sold

• The seller's cost for the goods sold

Cost-of-Living Adjustment (COLA)

• A wage increase based on changes in the CPI

Credit Memo

• A form notifying a buyer that their account balance has been reduced

Current Ratio

• Compares current assets to current liabilities

Current Yield on Bonds

• Calculated by dividing a bond's annual interest income by its price

Debit Card

• A card used to pay for purchases directly from a bank account

Debt to Equity Ratio

• Long-term liabilities divided by a firm's capital; measures financial risk

Deductions

• Subtractions from gross pay

Deposit Slip

• A form listing all items deposited in a bank account

Depreciation

• The decrease in an asset's value due to wear and aging

Direct Deposit

• Electronic transfer of funds directly into employee bank accounts

Disability Insurance

• Pays a portion of lost income due to inability to work from health condition or injury

Discount Series

• A trade discount with multiple discounts applied sequentially

Domestic Business

• Business activities within a country's borders

Double-Time Pay

• Pay at twice the regular rate

Down Payment

• The initial payment made when buying on an installment plan

Earned Income

• Money received from work, such as wages, salaries, and tips

Electronic Funds Transfer (EFT)

• Transferring funds electronically between accounts

Exact Interest Method

• Interest calculation based on exact time and a 365-day year

Exempt Employees

• Salaried employees not eligible for overtime pay

Exemption

• An amount of income that is free from tax

Exporting

• Selling goods/services produced domestically to other countries

Extension

• Total price for a quantity of items, calculated by multiplying quantity by unit price

Factory Overhead

• Total costs of factory operations like rent, depreciation, and utilities

Finance Charge

• Total cost of an installment loan, including interest and other fees

First-In, First-Out (FIFO)

• An inventory valuation method where the first goods purchased are assumed to be sold first

Fixed Cost

• Overhead expenses that remain constant regardless of production volume

Flat Tax

• A tax rate that remains the same regardless of income level

Free on Board (F.O.B.)

• A pricing term designating who pays for transportation costs

Forecasts

• Estimates of future sales

Freight

• Delivery service for heavy or bulky goods

Frequency Distribution

• A table showing the frequency of numbers or data points

Fringe Benefits

• Non-wage compensation like vacation, insurance, and retirement plans

Graduated Commission

• A commission system where the rate increases as the sales base increases

Grand Total

• The corner total on a columnar table, used for accuracy checks

Gross Domestic Product (GDP)

• The total market value of goods and services produced within a country's borders

Gross Income

• Total income in a year from all sources

Gross Pay

• The total amount an employee is paid before deductions

Gross Profit

• Revenue less cost of goods sold

Gross Profit Margin

• Gross profit compared to net sales

Home Coverage Area

• A region where you have wireless phone service

Importing

• Buying products produced outside of your country

Income Statement

• A report that shows how much money has been earned and spent during a period of time

Individual Retirement Account (IRA)

• A retirement investment with special tax benefits

Inflation

• A rise in the prices of goods and services

Interest

• Money paid for the use of someone else's money

International Business

• Business activities across national borders

Invoice Price

• The price after a trade discount has been applied

Job Expenses

• Costs associated with a job, like travel and dues

Labor Force

• All people who are working or looking for work

Last-In, First-Out (LIFO)

• An inventory valuation method where the last goods purchased are assumed to be sold first

Lease

• A rental agreement

Liabilities

• Debts of a business

List Price

• A price shown in a catalog

Major Medical Insurance

• Supplements basic health coverage for major illnesses/injuries

Manufacturer's Suggested Retail Price (MSRP)

• The price sticker on a new car's window

Markdown

• A reduction in retail price/discount

Market

• All potential customers for a product or service

Market Price

• The price at which a stock or bond is sold

Markup

• The amount added to the cost of goods to cover expenses and profit

Maturity Date

• The date a loan must be repaid

Merchandise Turnover Rate

• The number of times a store replaces its average stock of merchandise per period

Modified Accelerated Cost Recovery System (MACRS)

• A depreciation system allowing claims over a fixed number of years

Mortgage Loan

• A loan secured by property

Mutual Fund

• An investment company that buys stocks and bonds of other companies

Net Asset Value

• The value of a mutual fund share

Net Income

• The amount left after subtracting operating expenses from gross profit