Basic Rules

Question 1

Disposable Income

Answer 1

Personal Income - Taxes

Question 2

Discretionary Income

Answer 2

= Disposable Income - Financial Obligations

Question 3

Examples of Financial Obligations

Answer 3

Insurance, Rent/Mortgage, Car payments, Retirement Savings, Child’s education… etc

Question 4

Features & Examples of Macro Environment

Answer 4

• Beyond control of Any Company
• government policy (fiscal policy, regulatory policy)
• competition, technology, weather, religion, economy, culture, political situation, war

Question 5

Micro Environment

Answer 5

• company has total or some control

Question 6

4 P’s of Marketing

Answer 6

• Product - name, color, message
• Price - the strategy (skimming pricing, ex iPhone vs penetrating pricing)
• Place - mass distribution vs select stores
• Promotion - advertising, publicity, sponsorship

Question 7

Circular Flow

Answer 7

Continuous flow of money within a society

One purchase/payment (transaction) leads to another transation

Question 8

Total National Debt

Answer 8

$30 trillion

Question 9

Population of Labor Force

Answer 9

158 million

Question 10

US’s Debt/GDP ratio

Answer 10

130%

Question 11

Current unemployment rate

Answer 11

3.6%

Question 12

Types of Accounting

Answer 12

• Managerial Accounting
• Financial Accounting
• Intermediate Accounting
• Auditing
• Taxation (I & II)
• International Accounting
• Advanced Accounting

Question 13

Properties of Financial Accounting

Answer 13

MACRO LEVEL
provides high level financial information to:
- insiders (top management, employees, shareholders)
- outsiders (IRS, SEC, competitors, potential investors)

Question 14

Properties of Managerial Accounting

Answer 14

MICRO LEVEL

- manufacturing costs

Question 15

Types of Manufacturing costs (3 categories)

Answer 15

• Materials
• Labor
• Manufacturing Overhead

Question 16

Manufacturing Cost - Materials breakdown into…

Answer 16

Direct & Indirect Materials

Though IM is mainly MOH

Question 17

Labor Costs - breakdown into…

Answer 17

Direct and Indirect Labor

Though IL is mainly MOH

Question 18

Manufacturing Overhead (MOH) examples

Answer 18

• Indirect Material
• Indirect Labor
• Factory Rent
• Factory Insurance
• Factory Depreciation
• Factory Supplies

Question 19

Indirect Labor (Examples)

Answer 19

• supervision
• overtime
• idle time
• legal advising
• QC staff
• administrative
• materials handling
• procurement

Question 20

Indirect materials - definition

Answer 20

Goods that are part of the overall manufacturing process, but are not integrated into the final product. They cannot be linked to a specific product or job.

Question 21

Example - Indirect Materials

Answer 21

• PPE
• cleaning supplies
• disposable tools
• fittings and fasteners
• adhesives

Question 22

Example Direct Labor

Answer 22

• technicians on production line
• welders, painters, machinists

Note: they get factored into the direct cost of production of the product

Question 23

GAAP

Answer 23

Generally Accepted Accounting Principles

Question 24

Is GAAP limited to the US or international?

Answer 24

International (though not all countries)

Question 25

Cycle of Money

Answer 25

Movement of money from lender to borrower and back again [loans are investments from the perspective of the lender who is buying a future cash flow from the borrower who is selling the future cash flow.]

Question 26

3 Legal forms of Business

Answer 26

- Sole Proprietorship - Partnership (General or Limited) - Corporations

Question 27

Pros of Sole Proprietorship

Answer 27

- don't need permission to take action - easy to set up, do not need a charter - pay taxes on individual rate, so no double taxation like a corporation

Question 28

Cons of Sole Proprietorship

Answer 28

- unlimited liability - if owner dies, the business dies - owner has difficulty to expand the business > limited opportunities to raise capital due to limited collateral

Question 29

Properties of General Partnership

Answer 29

- jointly owned by 2+ individuals, spelled out the % each owns - partners have unlimited liability - both financially and legally - partners can take strategic decision - all partners pay taxes on an individual basis (part of personal income tax)

Question 30

Difference between Limited and General Partners

Answer 30

in limited, their liabilities are limited to the amount of money they invested in the partnership

Question 31

Properties of Corporations

Answer 31

- legal entity separate from the owners (shareholders) - separates owners and the managers - advantageous to owners because shareholders have limited liability

Question 32

3 Values of common stock

Answer 32

- Par Value - Market Value - Book Value

Question 33

Definition: Par Value of Common Stock

Answer 33

A value which is written on the stock/share Very low value (few cents, may be a few $ in certain industries)

Question 34

Definition: Market Value of common stock

Answer 34

Value of the stock which is being traded in stock exchanges

Question 35

Definition: Book Value of Common Stock

Answer 35

Value of the company stock from an accounting point of view

Question 36

Book Value of a Stock =

Answer 36

= (Total Stockholder's Value - anything that belongs to preferred stock)/Total # of outstanding shares

Question 37

Definition Call Premium

Answer 37

= Callable Price - Par Value

Question 38

Default Value of Par Value of Preferred Stock

Answer 38

$100

Question 39

Value of FICA Tax (Social Security Portion)

Answer 39

6.2%

Question 40

Value of FICA Tax (Medicare portion)

Answer 40

1.45%

Question 41

Finance relies on strong

Answer 41

Accounting

Question 42

4 filing statuses on the W_4 form

Answer 42

Single Married filing jointly Married filing separately Head of household

Question 43

The US has what time of income tax rate

Answer 43

Graduated

Question 44

You will pay zero federal income tax withholding if

Answer 44

you are in the zero tax bracket

Question 45

$12550, single is the limit for which tax bracket

Answer 45

zero income bracket

Question 46

STIW means

Answer 46

State income tax withholding

Question 47

what is the state income tax of Massachusetts

Answer 47

5.05%

Question 48

FICA stands for

Answer 48

Federal Insurance Contributions Act

Question 49

SSA was established in ____ by ___

Answer 49

1936, FDR

Question 50

The banking industry is charging consumers $____ per year in service charges and fees

Answer 50

$15 billion

Question 51

What percentage of Americans do not have anything saved for retirement

Answer 51

48%

Question 52

How many Americans are living below the poverty line

Answer 52

35 million

Question 53

what is the federal poverty line

Answer 53

$24k/year

Question 54

Marty Walsh was appointed

Answer 54

US Secretary of Labor

Question 55

Grounding of 737 Max airplane is an example of

Answer 55

Macro environment - government policy intervenes in company's decision

Question 56

Weather impact is an example of

Answer 56

Macro environment

Question 57

Things to control in a product

Answer 57

Name (chevy Nova) Color Message

Question 58

Skimming Pricing is

Answer 58

Setting initial price very high, and then reduce it | Ex. iPhone

Question 59

Penetrating pricing is...

Answer 59

Setting initial price very low, then after you capture the market you increase the price Ex. Japanese cars in the USA