Professional Documents
Culture Documents
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Two types:
1. Pure risk free
2. Risk considered speculative because it is based
on presumption about future events that may not
occur.
Engels Law - An economic theory introduced in 1857 by Ernst
Engel, a German statistician, stating that the percentage of
income allocated for food purchases decreases as income
rises. As a household's income increases, the percentage of
income spent on food decreases while the proportion spent
on other goods
GNP Gross National Product - Gross national product (GNP)
is a broad measure of a nation's total economic activity. GNP
is the value of all finished goods and services produced in a
country in one year by its nationals.
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Cuevas Group
Partnership - an arrangement in which two or more
individuals share the profits and liabilities of a business
venture. Various arrangements are possible: all partners
might share liabilities and profits equally, or some partners
may have limited liability.
3 Main Categories of Partnership
General Partnership - all parties share the legal and financial
liability of the partnership equally. In other words, the
individuals are personally responsible for the debts the
partnership takes on.
Limited Liability Partnership - This arrangement limits
partners' personal liability, so that, for example, if one
partner is sued for malpractice, other partners' individual
assets are not at risk as a result.
Limited Partnership - are a hybrid of general partnerships
and limited liability partnerships. At least one partner must
be a general partner, with full personal liability for the
partnership's debts, while at least one partner's liability must
be limited to the amount she's invested in the partnership.
Payback Period - the length of time required to recover the
cost of an investment. The payback period of a given
investment or project is an important determinant of
whether to undertake the position or project, as longer
payback periods are typically not desirable for investment
positions.
Asset - It is a resource with economic value that an individual,
corporation or country owns or controls with the expectation
that it will provide future benefit. It can be also thought of as
something that in the future can generate cash flow, reduce
expenses, improve sales, regardless of whether it is a
companys manufacturing equipment or a patent on a
particular technology.
Assets are recorded on companies balance sheet based on
the concept of book value, which represents the first/original
cost of the asset, adjusted for any improvements or aging.
Assets coexist with liabilities.
Liquidity - It is describe as the degree to which an asset or
security can be quickly bought or sold in the market without
affecting the assets price.
The degree to which an asset or security that CAN
NOT be quickly sold in the market is called Illiquid.
Liquid Asset gold.
Illiquid Asset collectors item, equipment, facilities and etc.
Category:
It can be categorized into short-term or current
assets, fixed assets, financial investments and
intangible assets.
Current Assets it includes cash, inventory (raw materials or
goods to be sold), accounts receivable (it has made a sale but
has yet to collect the money from the purchaser) and etc.
Fixed assets it includes plants, equipment, buildings and
others.
Financial investments it includes stocks, corporate bonds,
and other hybrid securities.
Intangible assets no physical presence includes patents,
trademarks, copyrights etc.
Sunk Cost - A sunk cost is a cost that has already been
incurred and cannot be recovered. Sunk costs (also known as
retrospective costs) are sometimes contrasted
with prospective costs, which are future costs that may be
incurred or changed if an action is taken.
Capital Recovery - When you make an investment in an asset
or a company, you get a negative return on your investment
until you recoup your initial investment. The return of that
initial investment is called capital recovery. Capital recovery
also occurs when a business recoups the money it invested in
machinery and equipment by selling or disposing of them.
Income Tax - Are assessed as a function of gross revenues
minus allowable deductions. They are levied by the federal,
most state, and occasionally municipal governments.An
income tax is a tax that governments impose on financial
income generated by all entities within their jurisdiction.
Property Tax - Are assessed as a function of the value of
property owned such as land, buildings, equipment, and so
on, and the applicable tax rates.
Joint Liability - An obligation, including an obligation to repay
a debt between two or more parties. A joint liability allows
parties to share the risks associated with taking on additional
debt, and to protect themselves in the event of legal litigation
and lawsuits.
Quant Fund - An investment fund that
selects securities based on quantitative analysis. In a quant
fund, the managers build computer-based models to
determine whether an investment is attractive. In a pure
"quant shop" the final decision to buy or sell is made by the
model; however, there is a middle ground where the fund
manager will use human judgment in addition to a
quantitative model.
Matias Group
Absolute Poverty - Poverty defined with respect to an absolute material
standard of living. Someone is absolutely poor if their income does not
allow them to consume enough to purchase a minimum bundle of
consumer goods and services (including shelter, food, and clothing). An
alternative approach is to measure relative poverty.
Capitalism - An economic system in which privately-owned companies
and businesses undertake most economic activity (with the goal of
generating private profit), and most work is performed by employed
workers who are paid wages or salaries.
Cost of Job Loss - When a worker is laid off or fired, they experience a
significant out-of-pocket cost. That cost of job loss depends on how
much they were earning in their job, how long it takes them to find a
new job, the level of unemployment benefits they are entitled to, and
the level of their pay in the new job. The higher the cost of job loss, the
more employers will be able to threaten and discipline their workers.
Cutting unemployment insurance has been one key neoliberal strategy
for increasing the cost of job loss.
Deficit - When a government, business, or household spends more in a
given period of time than they generate in income, they incur a deficit. A
deficit must be financed with new borrowing, or by running down
previous savings.
Depression - A depression is a very deep, long, and painful recession, in
which unemployment rises to very high levels, and economic output
does not bounce back.
Gross Domestic Product - The value of all the goods and services
produced for money in an economy, evaluated at their market prices.
Excludes the value of unpaid work (such as caring reproductive labor
performed in the home). GDP is calculated by adding up the value-added
at each stage of production.
Hoarding - A situation in which financial investors, companies, or
individual consumers choose to hold hoards of cash or other liquid
assets, rather than spending and re-spending that money. Hoarding
often results from intense fears about future economic and financial
turbulence yet ironically hoarding can create the very recession which
hoarders fear!
Mortgage - A mortgage is a special kind of credit, usually longer-term in
duration, used to finance the construction or purchase of property or a
long-lasting structure (such as a home or building).
Shares - Financial assets which represent the ownership of a small
proportion of the total equity (or net wealth) of a corporation. Shares
can be bought and sold on a stock market.
Stock Market - A place where shares of joint stock corporations are
bought and sold. Most modern stock markets no longer have a physical
presence, but rather consist of connected computer networks.
Tariff - A tariff is a tax imposed on the purchase of imports. It is usually
imposed in order to stimulate more domestic production of the product
in question (instead of meeting domestic demand through imports).
Unions - Organizations of working people which aim to bargain
collectively with employers in order to enhance workers bargaining
power, raise wages, and regulate working conditions.
Alacapa Group
Propensity - ECONOMICS abounds with propensities to do
various things: consume, save, invest, import, and so on.
AVERAGE propensity total CONSUMPTION
divided by total INCOME. The ratio of
total consumption to total income.
MARGINAL propensity - is a metric that quantifies
induced consumption. It is an increase in
consumption caused by an addition to income
divided by that increase in income
Price discrimination - When a firm charges different
customers different PRICES for the same product.
Capital recovery - earning back of the initial funds put into an
investment.
Considerations
initial cost,
Gobres Group
PASSIVE INCOME - earnings an individual derives from a
rental property, limited partnership or other enterprise in
which he or she is not materially involved.
TAXES - generally an involuntary fee levied on individuals or
corporations that is enforced by a government entity,
whether local, regional or national in order to finance
government activities.
ABSENTEEISM - is the habitual non-presence of an employee
at his or her job.
ABANDONMENT - an expression that describes the forfeiture
of property and the ensuing claim over that property by a
second party.
DEBIT CARD - payment card that deducts money directly from
a consumers checking account to pay for a purchase.
MAPLE BOND - bond denominated in Canadian dollars that is
sold in Canada by foreign financial institutions and
companies.
MONETARISM - set of views based on the belief that inflation
depends on how much money the government prints.
MONOPOLISTIC MARKET - is a theoretical construct in which
only one company may offer products and services to the
public.
REAL ESTATE - is property comprised of land and the
buildings on it as well as the natural resources of the land
including uncultivated flora and fauna, farmed crops and
livestock, water and minerals.
PARTNERSHIP - is an arrangement in which two or more
individuals share the profits and liabilities of a business
venture.
Merin Group
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DEPRECIATION
E.g. Services
7. SUNK COST
Bayot Group
Sunk Cost - A sunk cost is a cost that was incurred in the past
and cannot be undone. Since most transactions cannot be
undone, most amounts spent in the past can be described as
sunk. In other words, a past or sunk cost will be there
regardless of what you decide to do today or in the future.
Historical Cost - Historical cost is a term used instead of the
term cost. Cost and historical cost usually mean the original
cost at the time of a transaction. The term historical cost
helps to distinguish an asset's original cost from its
replacement cost, current cost, or inflation-adjusted cost.
Dividends - Paid to shareholders after expenses and taxes
have been paid. When a corporation earns a profit or surplus,
it can re-invest it in the business (called retained earnings),
and pay a fraction of the profit as a dividend to shareholders.
Liability - A liability is a company's financial debt or
obligations that arise during the course of its business
operations. Liabilities are settled over time through the
transfer of economic benefits including money, goods or
services.
Appraised Value - The estimated market value of an asset
Capital Recovery - Charging periodically to operations
amounts that will ultimately equal the amount of capital
expended.
Deferred Interest - A loan with a payment structure that
allows for a scheduled payment to be made where it is less
than the interest charge on the loan at the time the
scheduled payment is made.
Equity - Equity is the difference between the value of the
assets and the cost of the liabilities of something owned.
Inflation - is the increase in the amount of money necessary
to purchase the same amount of a product or service over
time. Consequently, inflation reflects a reduction in
the purchasing power per unit of money.
Break-even Analysis
Break-even is the condition for which revenues and costs are
equal.
The level of production where the total income is equal to the
total expenses is known as the break-even point. It is
necessary to determine the break-even point in order to
estimate the amount of profit or loss.
Pampola Group
Cash Flow - The flow of money into and out of a company,
project, or activity. Revenues are cash inflows and carry a
positive (+) sign; expenses are outflows and carry a negative
() sign.
Cash Flow Diagram is a picture of a financial problem that
shows all cash inflows and outflows plotted along a horizontal
time line.
Amortization - The reduction in value over time of intangible
assets such as patents, copyrights, leasehold improvements,
franchise rights, or other nonphysical assets.
Depreciation - Reducing fixed assets such as equipment or
buildings in value over time. The reduction in value is entered
as an expense in the cost category of the Income Statement.
Salvage Value - The estimated value of the asset when it is no
longer used by the organization. Approximates the future
market value of the asset. It is the estimated resale value of
an asset at the end of its useful life.
Costs - Expenses for materials, labor services, overhead, and
other expenses. Costs are deductions from the Income
Statement; they are money flowing from the organization.
Straight-line Method - A depreciation method that reduces
the asset value at a constant rate over its life. It is easiest
to use a standard useful life for each class of assets. Divide
the estimated useful life (in years) into 1 to arrive at
the straight-line depreciation rate. Multiply
the depreciation rate by the asset cost (less salvage value).
Sum-of-Years-Digits - A mathematical depreciation method
that creates high depreciation expense in the early years of
the asset's life and low depreciation expense in the later
years. The sum of the years' digits method will result in
greater depreciation in the earlier years of an asset's useful
life and less in the later years
Compound Interests - Interest that is computed on the
original unpaid debt and the unpaid interest
Annuity - An annuity is a series of equal payments made at
equal intervals of time. Financial activities like installment
payments, monthly rentals, life-insurance premium, monthly
retirement benefits, are familiar examples of annuity
Capitalized Cost