Applied Business Practices Final Exam Review

Credit –Borrowing money with the promise to repay in the future Installment Loan –Loan in which you make monthly payments for a specific amount of time

Credit Finance Charge –Total dollar cost of credit including interest and all other charges Interest –Cost of borrowing

Credit Comparing Credit Cards –Annual Fees –Interest rates –Other Fees –Benefits –Introductory rates Most common type of credit card –Bank Card

Credit Character –Willingness to repay Capacity –Ability to repay the debt Capital –Value of your assets

Credit –Collateral Property pledged to back a loan –Co-signer Person who signs on a loan with you and will be responsible for the repayment if you don’t

Credit Credit Report –shows the debts you owe, how often you use credit and whether you pay your debts on time Credit Bureau –Company that gathers information on your credit

Credit Truth in Lending –Must provide the total cost of credit before signing an agreement Equal Credit Opportunity Act –Prohibits creditors from denying a person credit because of age, race, gender, or marital status akes

Credit Consumer Credit Reporting Reform Act –Now the burden of proof of unfavorable credit is now on the credit reporting agency not the consumer Fair Debt Collecting Act –bans threats and other inappropriate actions when a creditor is trying to collect debt

Credit Bankruptcy –Legal process of reducing or eliminating an amount owed

Taxes Tax Return –Set of forms used by taxpayers to calculate tax obligation Form W-4 –Provides the information of the amount to withhold from your paycheck. –Completed by the Employee Allowances –More allowances = less withheld from paycheck

Taxes Withholding –Deducting money from your wages to collect payroll taxes Gross Income –Amount you earn before taxes are withheld Net Income –Amount you receive after withholdings are deducted from your gross pay.

Taxes Form W-2 –Summary of your earnings and withholdings for the year for a job Withhold too much = Refund FICA –Law requiring payment of Social Security and Medicare taxes

Taxes IRS –Agency that collects taxes Employers and Employees pay the same amount of Social Security and Medicare taxes Taxes are due April 15 Dependents – people you financially support

Taxes Estate Taxes –Taxes on property received when someone dies Excise Tax –Collected on sale of specific goods or services Gas Firearms Air travel

Taxes Sales Tax –Taxes added to items purchased Sin Tax –Taxes on items harmful to your health Business (License) Tax –Tax paid for certification –May be accompanied by a test

Taxes Federal Government Spends on: –Social Security, Medicare, other retirement –National defense –Welfare State/Local Government Spends money on: –Roads –Schools –Unemployment Fill out a 1040 tax return when –Give to charities –Have dependents

Moving out on Your Own Landlord –Owns rental property Lease –Legal agreement that gives you the right to live at a property for a specific time Purpose of a lease –Protect landlord and tenant

Moving Out On Your Own Security Deposit –Money the landlord will hold to cover for damages Rent should be no more than 1/3 of monthly income Renter’s Insurance covers –Tenant’s belongings

Moving Out on Your Own Mortgage –Loan to buy a home You can afford 2.5 times your annual income when buying a home Fixed Expenses –Savings, rent, insurance Variable –Going out to eat, shopping, going to movies

Moving Out on Your Own Energy label –Predict the cost of running an appliance Appraisal –Tells the value of a home Lien –Claim against a property

Buying a Car Insurance –Bodily Injury Liability Covers other people in other car –Property Damage Liability Covers other car or property –Collision Covers your car when you are at fault in accident –Comprehension Covers for any non-collision damages such as theft or a tree falls on car

Buying a Car Test drive a car for –30 to 45 minutes Signs of Engine trouble –Blue or black exhaust As-Is Warranty –Buyer pays for all repairs

Buying a Car Invoice Price –Price the dealer pays Margin –Amount you negotiate when buying a car (between invoice and sticker) Fair price to offer for a car is 10 – 13% over invoice price

Buying a Car Good source to use when buying a car is –Consumer Reports (or Consumer Reports.org) Odometer –Measures miles traveled To get best price for TRADE-IN –Sell it yourself