Bluff

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 Todd gave Intrek Computer
Services a personal check for
 which his bank guaranteed
payment. This is an example
  of which type of payment
          services?
        Certified check
Jack reviewed his company's
 budget for six months and
determined that it is spending
     more on credit card
  purchases. Which type of
     budget was used?
          Operating
  Direct Finance Company's
 primary function is to use its
    own money instead of
customers' savings to provide
  loans to other businesses.
 This is an example of which
 type of financial institution?
         Non-depository
     The Federal Reserve
System supplied the monetary
 system with $300 billion. This
is an example of which service
    of the Federal Reserve
            System?
    Participating in open market
              activities
Harry's Grocery Store revenue
for last year was $98,000 and
it paid $103,000 in expenses.
  Which is the net income/net
   loss amount for the store?
         5,000 net loss
  Carl estimated that his
 business could invest an
additional $40,000. Which
type of budget was used?
          Cash
Phase of a business: Financial
 planning includes determining
whether enough money is made
 to cover growth opportunities.

           Expansion
Budget used by a new business
   or during expansion of a
business until profits are made.
            Start up
Budget used to estimate cash
flow in and out of a business
            Cash
What’s the first step in
 creating a budget?
Prepare a list of income and
      expense items.
 What’s the last step in
  creating a budget?
 Clearly communicate the budget
to key employees in order to make
    sound business decisions.
 Checks that have not been deducted
from the bank statement balance (they
  haven’t been cleared by the bank).

            Outstanding
   Sarah purchased school
supplies with a store gift card
of $300. This is an example of
    which type of payment
          services?
           Electronic
   What’s the first step in
opening a checking account?
     Signing a signature card
 This financial statement lists
assets, liabilities, and owner’s
            equity.
         Balance sheet
This financial statement includes
sales, expenses, and net profit or
               loss.
         Income statement
Type of ratio: Equals current
  assets/current liabilities
         Current ratio
Type of ratio: Shows how much
 the business relies on money
  borrowed externally versus
money from within the business.
Ideally, this ratio should be less
             than 2.0.
         Debt to equity ratio
Type of ratio: Equals net
  profit/owner’s equity
    Return on equity ratio
Type of ratio: Shows the amount
of sales needed for each dollar of
net income. While there is not an
  ideal ratio, managers use this
    number to compare to past
     periods to determine how
    changes in sales affect net
               income.
          Net income ratio
What are the 2 classifications
  of financial institutions?
   Depository and nondepository
 Type of depository institution:
   not-for profit, serve their
members only, and are owned by
       their depositors.
          Credit unions
Type of depository institution:
offer many different services,
including savings, loans, and
      checking accounts.
       Commercial banks
Type of financial institution:
Earns money to finance their
 business by selling specific
  services such as policies,
   investments, and loans
        Non-depository
Name 2 types of non-
depository institutions.
        Life insurance companies
          Investment companies
       Consumer finance companies
           Mortgage companies
          Check-cashing outlets
                Pawnshops
   What does it mean to
reconcile a bank statement?
   Make the check register (your
 records) equal the bank statement
          (bank’s records)
 Anyone may cash a check
with this type of endorsement.
            Blank
   This type of endorsement
transfers payment of a check to
         someone else.
            Special
 This type of endorsement is the
safest type of endorsement, as it
 cannot be cashed by a thief or
 someone who finds the check.
            Restrictive
What’s the last step in writing
          a check?
           Signing it
Which is the FIRST step in the
   check writing process?
      Writing the appropriate
     information in the check
              register
Which banks are required to
 join the Federal Reserve?
        National banks
How many districts are in the
    Federal Reserve?
             12
Name 2 services provided by
         the Fed.
             Supervision of banks
    Participation of open market activities
          Acting as a clearinghouse
               Holding reserves
           Approving bank mergers
          Supplying paper currency
         Managing the discount rate
The Federal Reserve System
  aids in transferring funds
   between banks in North
  Carolina and New Jersey.
 This is an example of which
    service of the Federal
      Reserve System?
        Clearinghouse
Name 3 of the 7 services
  offered by financial
      institutions.
  Savings, payment, lending,
 electronic banking, storage of
 valuables, investment advice,
     management of trusts
  What are liabilities?

Money owed to others that must
        be paid back
How much does the FDIC
insure up to per account?
         $250,000