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Capstone Assignment Definition Insurance


401(k)A retirement account to which an eligible employee can contribute a certain amount of his or her pretax salary; earnings are tax-deferred. Some employers may match a stated percentage of employee 401(k) contributions. The reduced cost and liability of 401(k) plans appeal to employers.
403(b)A qualified retirement plan similar to the 401(k), available to employees of nonprofit and government organizations.
Account BalanceThe net of credits and debits for an account at the end of a reporting period.
Account ReconciliationThe process of ensuring that the beginning balance plus the sum of all entries on an account statement equals the ending balance. After deposits, interest received, and credits are added and automatic withdrawals, outstanding checks, negotiated checks, and account charges are subtracted, if the resulting balance equals the ending balance on the statement, the account is reconciled.
AccountantAn individual trained and knowledgeable in the profession of accountancy.
Accounting (Accountancy)The function of compiling and providing financial information primarily by reports referred to as financial statements. Accounting includes bookkeeping, systems design, analysis and interpretation of accounting information.
Accounts PayableObligations to pay for goods or services that have been acquired on open accounts from suppliers. Accounts Payable is a current liability in the Balance Sheet.
Accounts ReceivableAmounts due the company on account from customers who have bought merchandise or received services. Accounts Receivable is a current asset in the Balance Sheet.
Accrual BasisThe method of keeping accounts which shows all expenses incurred and income earned for a given period of time, even though such expenses and income may not actually have been paid or received in cash during the same period of time.
Accrued ExpenseAn expense incurred, but not yet paid.
Accrued RevenueRevenue earned, but not yet collected.
Accumulated DepreciationAn account to which estimated depreciation is added.
Active-Participant StatusA person who participates in a qualified pension, stock bonus, or profit-sharing plan, a qualified annuity plan, a tax-sheltered annuity (TSA) plan, a simplified employee pension plan, or a local, state, county, or federal retirement plan has active-participant status, as does his or her spouse.
ActuaryA person who analyzes probability and risk estimates for insurance contracts and retirement plans.
Adjustable Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a measure or an index, such as the rate on US Treasury bills or the average national mortgage rate. Borrowers assume a degree of risk in order to receive a lower rate at the beginning of an ARM.
Adjusted EntryAn entry made in the general journal at the end of an accounting period to bring certain accounts up to date.
Adjusted Gross Income (AGI)The amount of income subject to federal income taxes. To determine AGI, subtract deductions (e.g., business expenses or IRA contributions) from gross income (employment income, interest income, dividends, and capital gains).
AdvanceMoney received from an employer before it is actually earned.
AgentA person authorized by another to act on their behalf. Thus, an agent can enter into contracts and other such legal binding functions on behalf of another. Usually, the corporation's officers act as corporate agents.
Aggressive Growth FundA mutual fund designed to maximize long-term capital growth, rather than dividend income, by investing in narrow market segments, small company stocks, and companies with high growth rates.
Allocation FormulaThe formula that governs employer contributions to employee profit-sharing plans and redistributes funds forfeited by employees who leave these plans.
Alternative Minimum Tax (AMT)A tax calculation designed to prevent taxpayers from escaping their fair share of tax liability by taking numerous tax breaks; it adds certain tax preference items back into adjusted gross income. If AMT liability is greater than regular tax liability, the taxpayer must pay the AMT amount.
American Opportunity Tax Credit (Hope Credit)A federal tax credit that compensates families for a certain amount of tuition per student per year for the first four years of post-secondary education.
AmortizationA way of measuring the consumption of the value of long-term assets like equipment or buildings. This process gradually eliminates a debt, loan, or mortgage over a period of time. It can also be used to deduct capital expenses over a period of time.
Annual Meeting of ShareholdersNearly all states require a corporation to hold an annual meeting of shareholders at which time directors are elected and other corporate issues are voted on.
Annual Percentage Rate (APR)The yearly cost of credit or a loan, expressed as a simple percentage. All consumer credit agreements and loans are legally required to disclose the APR.
Annual ReportA yearly statement that describes company management, operations, and financial information. The Securities and Exchange Commission (SEC) requires all corporations issuing registered stock to publish annual reports, which are sent to shareholders and also made available for public review.
AnnuitantThe person to whom an annuity is payable.
AnnuityA long-term contract sold by life insurance companies that guarantees fixed or variable payments to the purchaser at regular intervals. Payments are usually scheduled to begin at a future time, such as retirement. Some annuities provide tax-deferred earnings, often as part of retirement plans.
Annuity Cash RefundThe contract for an annuity offering income for life may include a death benefit for the total premiums paid. When the annuitant dies, the annuity cash refund will be the net sum of premiums paid minus the amount received in annuity payments.
Annuity CertainAn option in an annuity contract that allows the annuity owner to select a future level of income covering a specified number of years, generally 10 years. If the annuitant dies before the end of this period, the remaining obligation is transferred to a designated beneficiary.
Annuity Joint LifeAn annuity option for two or more individuals where payments cease at the death of the first annuitant.
Annuity Joint and SurvivorAn annuity option that provides payments for two designated annuitants. Upon the death of the first annuitant, the surviving annuitant receives prearranged, continued payments for life, based on a percentage received by the first annuitant.
Annuity Modified RefundIn a contributory retirement plan, the annuity beneficiary of a deceased retiree receives the accumulated balance of the pension fund, which is referred to as the annuity modified refund.
Annuity Payout OptionThe choice of how payments from an annuity will be received: as a fixed dollar amount, for a fixed period, or over the lifetime(s) of one or two annuitants.
Application FeeA fee to process a loan application.
AppraisalAn assessment of a property's value by a qualified appraiser, based on information from recent sales of similar properties.
AppreciationIncrease in value. Often used with reference to an asset, such as land, building, stocks or bonds.
Articles of Incorporation (Certificate of Incorporation or Charter)The articles are the primary legal document of a corporation; they serve as a corporation's constitution. The articles are filed with the state government to begin corporate existence. The articles contain basic information on the corporation as required by state law.
Articles of OrganizationLLCs must file the articles with the proper state authorities to begin existence. The articles of organization are very similar to a corporation's articles of incorporation.
AssetAnything of value owned or controlled by a corporation or individual. An asset may be tangible or intangible.
Asset AllocationA process that divides investments among different asset classes, such as stocks, bonds, and cash, in order to reduce portfolio risk.
Asset ClassA specific category of assets or investments, such as cash, bonds, stocks, or real estate. Assets in the same class have similar characteristics and behave similarly in the marketplace.
AssignmentThe legal transfer of ownership of an asset to another person or entity.
Assumed NameA name under which a corporation conducts business that is not the legal name of the corporation as shown in its articles of incorporation. If a corporation does business under an assumed name, it may be required to file registration of the assumed name with the state. Also known as a Fictitious Business Name.
Authorized Shares or StockThe total number of shares a corporation is authorized to sell. This number is specified in the articles of incorporation. All of the shares authorized need not be issued.
Automatic ReinvestmentAutomatically depositing mutual fund dividends or capital gains back into an account to buy additional shares.
Bad DebtsAccounts receivable that are uncollectible used in accrual method accounting.
BalanceAmount arrived at by adding all debits and subtracting all credits to ensure total debits equal the total credits.
Balance SheetStatement, at a particular point in time, of the financial position of a business or organization. This is generally divided into three parts: assets, liabilities and ownership, or equity. Also known as Statement of Financial Position.
Balloon MortgageA type of mortgage with a final payment that is considerably larger than the preceding payments, typically used when borrowers anticipate receiving a large sum of cash to pay the balance or when they expect to refinance before the final payment.
Bank OverdraftBalance of a bank account when funds withdrawn exceed funds deposited.
Bank ReconciliationAnalysis that accounts for the difference between the balance shown on the bank statement and the balance shown in the accounting records on a given date.
BankruptLegal status of a person/corporation who/which is unable to pay its debts as they become due and who/which has made a transfer of property or of a right or interest in property to a trustee for the benefit of creditors.
BankruptcyThe state of being insolvent or unable to pay outstanding debt. Declaring bankruptcy is expensive, and it can have adverse effects on one's credit in the future. These are some common ways to apply for bankruptcy:
BasisThe total original cost (including any additional outlays) of an equity investment or a piece of property. This is used by the Internal Revenue Service to compute taxable gain, profit, or appreciation.
Basis PointA measurement of variation in financial instruments, equal to .01%. For example, a yield that has increased from 8.97% to 9% has increased by 3 basis points.
Bear MarketAn extended period during which market prices decline. The opposite of a bull market.
BeneficiaryThe person or entity named in a will, life insurance policy, qualified retirement plan, or annuity who will receive benefits upon the death of the insured or the plan participant.
Benefits ReceivedWhen people pay taxes according to the amount of government aid (benefits) they receive. Examples of benefits the American public receives include (to name only a few): welfare, child care, Medicare and Medicaid. Some people believe it is only fair that people pay taxes based on the amount of government aid they receive.
BetaA measure of a security's price volatility relative to an appropriate market index. For example, the S&P 500 index is considered to have a beta of 1; stocks with betas greater than 1 experience more price fluctuations than that index, while the prices of stocks with betas less than 1 fluctuate less often.
Bill of LadingWritten document issued by the carrier of goods. Also, a receipt for goods and a contract to deliver goods.
Blue-Chip StockThe common stock of a company with a reputation for quality and a long history of earnings growth and dividend payments, such as General Electric, IBM, or DuPont.
BondA debt security issued by a corporation, government, or governmental agency that obligates the issuer to pay interest at predetermined intervals and repay the principal at maturity. A bond's face value is the amount of money the holder will receive when the bond matures. The face value does not change, but the bond's market value may fluctuate before maturity.
Book Value(1) The current value of a fixed asset as shown by the records; the difference between the original cost of the asset and the accumulated depreciation. (2) The difference between the accounts receivable and the allowance for bad debts. (3) The value of a share of stock as shown by the corporate books.
Book of Original EntryA journal in which transactions are recorded for the first time before summarizing or posting to ledger accounts. For example, purchase journals, cash receipts journals, accounts payable journals, disbursements journals, general journals and payroll journals are all books of original entry. See General Journal and Journal.
BookkeepingThe recording of financial transactions electronically or manually. The record-keeping part of the accounting process.
BrokerA financial professional who facilitates the trading of services or property such as securities, real estate, insurance, or commodities.
BudgetA report of projected income and expenses for a given period.
Bull MarketAn extended period of rising security prices in financial markets. The opposite of a bear market.
Business SuccessionA plan for the future transfer of a business entity, involving legal, financial, tax, and family concerns.
Business TaxesA government levy on income for businesses.
Buy-Sell AgreementA contract that provides for the purchase of all outstanding shares from a business owner. Generally, such contracts allow for a different ownership structure in the future.
Buy-and-HoldAn investment strategy that advocates holding securities for the long term and ignoring short-term price fluctuations.
BylawsBylaws are the rules and regulations adopted by a corporation for its internal governance. It usually contains provisions relating to shareholders, directors, officers and general corporate business. At the corporation's initial meeting the bylaws are adopted. Bylaws are a private document not filed with any state authority. Bylaws are more flexible than the articles of incorporation because they are easier to amend.
CAPSA limit on how much the interest rate can change either at each adjustment or during the life of the mortgage, e.g., "2/6" equates to 2% per year and 6% over life of loan.
Cafeteria Employee Benefit PlanA plan offering a variety of benefit options from which employees may choose, such as health insurance, life insurance, and retirement benefits.
Canceled CheckA check that has cleared the bank and is returned to the depositor with his monthly statement.
Capital (or Equity)Interest of the owner in the business that is the difference between Assets & Liabilities. Also called Equity or Net worth. In a corporation, capital represents the stockholders' equity.
Capital AssetAssets, of either a tangible or intangible nature, owned or held by a business which are expected to be used or held over several fiscal periods.
Capital Gain / LossProfit or gain realized from the sale or exchange of a capital asset. The amount is determined by calculating the difference between an asset's purchase and sale price.
Capital Gains DistributionA payment to shareholders of profits realized on the sale of an investment company's securities.
Capital Gains TaxA tax on profits from the sale of securities or other assets.
Capital LossA decrease in the value of an investment or capital asset from its purchase price.
Capital StockSee Stock and Authorized stock.
Cash AdvanceAn instant loan against a line of credit. Interest is usually charged on cash advances from the date the advance is made until it is repaid. Issuers may also charge transaction fees.
Cash BasisAn accounting method that counts cash inflows or outflows when they are actually expended or received (as opposed to accrual basis).
Cash BudgetA budget used to quantify an immediate short-term cash flow.
Cash FlowThe aggregate of all cash inflows and outflows. This can be expressed as positive or negative cash flow.
Cash ManagementThe process of channeling cash into expenditures that enhance productivity.
Cash Surrender ValueThe amount the policy-owner receives when voluntarily terminating a cash value life insurance or annuity contract before its maturity or before the insured event occurs.
Casualty LossSudden and unexpected losses due to damage, destruction, fire or theft, for which one can be compensated by insurance contracts.
Certificate of AuthorityA document issued by the proper state authority to a foreign corporation granting the corporation the right to do business in that state.
Certificate of Deposit (CD)An agreement with a commercial bank in which funds are deposited at a fixed interest rate for a specified period of time. CDs are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. There may be a penalty if funds are withdrawn before the CD reaches maturity.
Certified Public Accountant (CPA)A professional accountant who has received certification to practice accounting from a state board of examination and may also be a member of the American Institute of Certified Public Accountants or other various state CPA organizations.
Chapter 11A debtor (business, individual, or partnership) is declared bankrupt but is allowed reorganization to attempt debt repayment. Creditor approval is required. A separate taxable entity is created.
Chapter 13A debtor (individual or sole proprietor) is declared bankrupt but is allowed to retain estate related assets and restructure debt obligations for eventual payment. No creditor approval is required.
Chapter 7A debtor (individual) is declared bankrupt, and a court-appointed trustee initiates a liquidation process and a discharge of all eligible debts. The debtor has no financial sources to attempt a reorganization. A separate taxable entity is created.
CheckA written, signed, and dated instrument that allows for the transfer of money from a bank account to a payee.
Check RegisterA form of cash payments journal which is used to record deposits and expenditures in and out of a bank account.
ClaimA request for payment from an insurance policy.
Claims-Paying-Ability RatingAn assessment of an insurance company's ability to pay claims.
Close Corporation or Closely Held CorporationA close corporation is a corporation that possesses the following traits: a small number of shareholders, no ready market for the corporation's stock and substantial participation by the majority shareholders in the management of the corporation. Some states have close corporation statutes.
ClosingThe end of a trading session or the process of transferring real estate from a seller to a buyer.
Closing CostsCosts involved in transferring real estate from a seller to a buyer, over and above the price of the property. These can include charges for loan origination, discount points, appraisal, property survey, title search, title insurance, deed filing, credit reports, taxes, and legal services. Closing costs do not include points or the cost of private mortgage insurance (PMI).
Cloud on TitleA claim, lien, or right on real estate that requires a quitclaim deed to resolve the potential hindrance before the title can be transferred.
Combined Financial StatementA side-by-side accounting of balance and net worth statements for several affiliated business enterprises.
Commercial LoanA loan intended for short-term financing of a business, based on the creditworthiness of the business or owner and the prime lending rate.
Commercial PaperAn unsecured, short-term debt instrument used by corporations with high-quality debt ratings to fund short-term liabilities. Generally considered a safe investment.
CommissionThe fee charged by an agent or broker for facilitating a transaction.
CommitmentA written agreement specifying the terms and conditions of a mortgage.
Common StockA security that represents partial ownership or equity in a corporation. Holders of common stock are entitled to participate in the company's stockholder meetings and vote for the board of directors.
Compound InterestInterest calculated on both the principal amount invested and the previously accumulated unpaid interest.
CompoundingA process in which income and gains on an investment are reinvested to grow further. When you earn compound interest, you earn interest on both the principal amount and the accumulated interest as it is earned.
ConsigneeA person who receives goods that belong to someone else for future sale or other purpose. Although consignees are not the owners of the goods, they are accountable for them.
ConsignmentGoods that are in the hands of someone other than the owner for future sale or other purpose.
ConsignorThe owner of goods that are in another person's hands for future sale or other purpose.
Consolidated Financial StatementsFinancial statements that show the results of all operations under the parent company's control, including those of any subsidiaries.
Construction Loan NoteA short-term obligation used to fund a construction project. In most cases, the issuers, such as a city government, will repay the note obligation by issuing a long-term bond.
Contingent BeneficiaryA secondary beneficiary who receives insurance benefits if the primary beneficiary revokes his or her status, is ineligible, or is deceased.
Contingent LiabilityAn obligation to pay if certain future events occur. This can also refer to a defined obligation for which the chances of payment are minimal.
Controlling InterestDirect or indirect ownership of voting shares sufficient to elect the majority of the board of directors of a corporation.
Convertible Term InsuranceAn insurance policy that allows the policyholder to convert the face amount of coverage in term insurance to an identical amount of whole life insurance.
Corporate BondA debt security issued by a corporation that obligates the issuer to pay interest periodically and repay the principal at maturity. Corporate bonds often have higher interest rates than government bonds due to possible default risk.
Corporate Record BookMaintaining the proper records is very important to assure limited liability to corporate shareholders. The corporation should have a record book that contains a copy of the articles of incorporation, bylaws, initial and subsequent minutes of directors and shareholders meetings and a stock register.
CorporationA group of people acting jointly for business and tax purposes who are able to incur debt and realize profit without immediate legal or taxable liabilities. A corporate entity allows its owners to attract outside capital by selling shares of ownership, protects the owners from liability beyond their investment outlay, provides for continuity of operations beyond the lives of the current owners and allows changes in ownership through the transfer of shares.
CorrectionA reverse movement in the price of a stock, bond, commodity, or index that brings it more in line with its underlying fundamental value.
CosignerAn individual who signs a loan or credit card agreement along with the principal applicant and assumes responsibility for the outstanding balance if the applicant defaults.
Covenant not to CompeteA clause in a contract that obligates one party to refrain from performing professional or business activities similar to those of the other party.
Coverdell Education Savings Account (Coverdell ESA)A federal program that allows parents to accumulate tax-free savings for a child's college education, formerly called the Education IRA.
Credit (1)Legal obligation to make repayment at a later date for goods, services or money obtained through the extension of credit, or a promise to pay in the future. The cost of credit is usually referred to as a finance charge, interest or time-price differential
Credit (2)Entry recording an increase to a liability or owner's equity or revenue, or a reduction to an asset or expense. Credits are recorded in the right hand column of an account or a two-column book. Opposite of debit.
Credit BureauClearinghouse of consumer credit information used by businesses to determine the credit
Credit HistoryA record of how a party has paid past debts.
Credit LineA revolving agreement that allows a person to borrow any amount up to a preapproved limit for purchases or cash advances. When the outstanding balance is paid off, credit again becomes available to fund new purchases or cash advances.
Credit NoteIssued by a seller to a purchaser to record the reduction of a bill because of an allowance, return or cancellation. Opposite of an invoice.
Credit RatingA formal assessment of an individual's or a corporation's ability to handle credit, based on the history of borrowing and repayment, as well as the availability of assets and the extent of liabilities.
CreditsIf you have a store credit, you can use the credit to purchase merchandise free of charge. If you have a tax credit, your taxes are reduced by the amount of your credit. You can get tax credits for purposes such as child care expenses and the earned income credit for low-income taxpayers.
Cumulative VotingCumulative voting allows shareholders to aggregate their votes in favor of fewer candidates than there are slots available. This method of voting is intended to create adequate representation for minority shareholders.
Current AssetUnrestricted cash, or any other asset that is expected to be converted into cash or consumed in the production of income within a year.
Current LiabilityLiability expected to be liquidated in a year.
DebitAn entry recording an increase to an asset or expense or a reduction to a liability, revenue or owner's equity. Debits are recorded in the left-hand column of an account or a two-column book. Opposite of credit.
Debit CardA card issued by a bank that can be used to withdraw cash from an automated teller machine or to make purchases at merchant locations. Debit cards deduct funds from the checking or savings account linked to the card when they are used.
DebtA legal obligation to deliver a product, service or amount of money.
Debt-to-Equity RatioThe ratio that indicates a company's ability to repay outstanding creditors. This also indicates the degree of leveraged money to improve the rate of return for shareholders.
Decreasing Term InsuranceA term insurance policy with a death benefit that decreases over time. This type of insurance is often used in conjunction with a mortgage or other amortized debt to guarantee payment if the holder dies before it is paid off.
DeedA document that identifies legal ownership of real estate.
Deferred AnnuityAn annuity that pays an income or lump sum at a future date.
DeficitA negative amount of retained earnings caused by cumulative losses and dividend distributions exceeding cumulative net income.
Defined Benefit PlanAn employer funded and controlled retirement plan that pays a predetermined benefit based on an employee's years of service and salary or wages.
Defined Contribution PlanA retirement plan to which an employer contributes a fixed amount or percentage of the employee's salary each year. The employee may be allowed to make individual contributions or choose the investment mix for his or her account.
DeflationThe opposite of inflation. A reduction in the price of goods and services. Possible causes of deflation are a decrease in the supply of money or credit or reduced individual or government spending.
Demand LoanA loan repayable upon the demand of a creditor.
DependentA person who relies on another for financial support. Taxpayers who support dependents can claim tax exemptions for them.
DepletionGradual using up or consumption of a natural resource.
DepositFunds used as collateral for the delivery of a good, such as a security deposit. It can also refer to the transfer of funds to another party for safekeeping, such as a deposit into a bank account.
DepreciationThe decrease in value of a fixed asset during its projected life expectancy, or the decrease in value of one currency in relation to another.
DerivativeA financial instrument whose characteristics and value depend on the value of an underlying instrument or asset, such as a commodity, bond, equity or currency. Futures and options are types of derivatives.
Direct CostCosts identified with a specific unit of product. For example, clay in the production of flowerpots or tubing in the production of bicycles are direct costs.
Direct DepositThe transfer of funds refund directly to a bank account.
Direct RolloverThe tax-free transfer of money or property from one retirement plan or account to another.
Direct TaxA direct tax cannot be shifted to others, unlike an indirect tax. For example, federal income tax is a direct tax. You are required by law to pay.
DirectorsDirectors are elected by the shareholders. They manage or direct the affairs of the corporation. Typically, the directors make only major business decisions and monitor the activities of the officers.
Disability-Income InsuranceA policy that provides an income if total disability prevents the insured from working.
Discount BrokerA broker who buys and sells securities at lower rates than a full-service broker, and who may offer fewer services.
Disposable IncomeAn individual's income after taxes.
DissolutionThe termination of a corporation's legal existence. Dissolution may be caused in a variety of ways including: failure to file annual reports, failure to pay certain taxes, bankruptcy or voluntary dissolution of the corporation by the shareholders and directors.
DiversificationAn investment strategy that spreads investment risk over a number of industries, market sectors or companies. Gains in one area can offset losses in another.
DividendA distribution of earnings to a shareholder or mutual life insurance policy owner. This distribution is usually in the form of money or stock.
Dollar Cost AveragingA strategy that invests a fixed dollar amount in securities at set intervals, regardless of market prices. With this approach, an investor buys more shares when prices are low and fewer shares when prices are high, usually resulting in a lower average cost per share.
Domestic CorporationA corporation is domestic in the state where it was incorporated.
Double TaxationThe result of tax laws that cause the same earnings to be taxed twice. For example, C corporations are taxed at the corporate level, and their shareholders also pay taxes on the dividends they receive.
Dow Jones Industrial Average (DJIA)The price-weighted average of 30 actively traded blue-chip stocks on the New York Stock Exchange (NYSE). The DJIA represents 15-20% of the market value of NYSE stocks.
Early WithdrawalThe removal of funds from a fixed-rate investment before the maturity date or from a tax-deferred investment account before a predetermined time.
Earned IncomeThe sum of income pertaining to wages, salaries, tips, self-employed net earnings and any other income received for personal services.
Earned Income CreditA refundable tax credit low-income workers can file for, even if no income tax was withheld from the worker's pay.
Electronic BankingComputerized network services that allow bank account holders to securely access their accounts on the internet.
Electronic Commerce (E-Commerce)The use of the internet to conduct business and buy or sell goods and services.
Electronic Filing (IRS e-file)IRS e-file options allow you to file federal income tax returns, and some state returns, through a tax professional, through your home computer or even through your telephone. It may also be available in many other places in your local community.
Electronic Funds Transfer System (EFTS)A process by which funds are electronically transferred between accounts. EFTS allows for direct deposits or withdrawals without processing written checks.
Employee Retirement Income Security Act (ERISA)A 1974 law establishing government oversight and federal limitations for pension and retirement plans.
Employee Stock Ownership Plan (ESOP)An employer-sponsored program that encourages employees to purchase shares in the company they work for and possibly participate in management.
EndowmentAssets, funds or property donated to an individual, organization or group to be used as a source of income.
Engagement LetterWritten communication between an accountant and a client with respect to a professional engagement, outlining the scope of the accountant's responsibilities and arrangements agreed upon.
Enrolled AgentA federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.
EquityAnything that represents ownership interests, such as stock in a company. Equity can also refer to the difference between an asset's current market value and the debt against it.
Equity LoanA loan that allows a homeowner to borrow against the accumulated equity in his or her home.
EscrowA third-party agent, or account, that assumes possession of a contract, a deed or money from a grantor until all outstanding obligations or commitments are complete. Upon completion of these obligations, the property held in escrow is delivered to the grantee.
EstateReal and personal property owned by a person at the time of death. Real property is land and anything permanently attached to it.
Estate PlanningThe process of determining the disposition of a person's assets after death.
Estate TaxesFederal or state taxes levied on the assets of a person who dies, paid by the decedent's estate rather than by the heirs.
Excess CompensationThe amount above the specified amount upon which calculations for future benefits are based in a pension plan integrated with federal old-age, survivors' and disability insurance (OASDI).
Excise TaxExcise taxes are taxes on the sale or use of certain products or transactions.
ExecutorThe person who is named in a will to administer the distribution of the deceased's assets.
Exempt (from tax liability)Before a taxpayer pays taxes, he or she can claim a set amount of tax deductions for him or herself, a spouse and eligible dependents. The total amount is subtracted from the adjusted gross income before the tax on the remaining income is figured out.
Exempt (from withholding)A taxpayer can be exempt from paying a certain amount of federal income tax if they meet certain income, tax liability and dependency requirements.
ExpenditureConsumption of an asset or payment for an expense.
External AuditorAn independent accountant engaged to determine if the financial statements of an entity represent the economic events that occurred during the period audited. The external audit is for the shareholders and owners, rather than for management.
F.O.B.Shipping term meaning "free on board" to inform the purchasers of the location at which they become responsible for the shipping charges. For example, F.O.B. Toronto means the vendor pays the charges to Toronto's freight yard and the purchaser is responsible from there.
FICA (Federal Insurance Contributions Act)The Federal Insurance Contributions Act (FICA) consists of both a Social Security payroll tax and a Medicare tax. The tax is levied on employers, employees and certain self-employed individuals.
FORM 1040EZA simplified form to be used in place of the 1040 form for some individuals.
FORM W-2By January 31 of each year, your employer, even if you do not work there anymore, will provide you with a statement of how much you earned in wages, tips and other compensation from the previous year. This form will reflect state and federal taxes, social security, Medicare wages and tips withheld. It also includes a lot of other really important information you will need to file your return.
FORM W-4 (Employee's withholding allowance certificate)Form W-4 is used to determine how much of an employee's paycheck is withheld for federal income taxes.
Fair Market ValueThe highest price available in an open and unrestricted market between informed, prudent parties, acting at arm's length and under no compulsion to transact. Fair market value is expressed in terms of money, or money's worth.
Family Limited Partnership (FLP)A partnership of family members that helps arrange for generational transfers of wealth or a business, maintain control within the general partners and reduce potential liability to the transferor and transferee.
Federal Reserve System (The Fed)The board of governors that oversee the Federal Reserve Banks, establishes monetary policy, such as interest rates or credit, and monitors the economic health of the country. Its members are appointed by the President, subject to Senate confirmation and serve 14-year terms.
Federal Tax Identification NumberA number given to a corporation or other business entity by the federal government for tax purposes. Banks generally require a tax identification number to open bank accounts.
FiduciaryAn individual who provides investment advice for a fee, who exercises discretionary authority in managing assets or who is responsible for holding assets in trust and investing them for the benefit of another party.
File A ReturnTo file a return is to send in your completed tax forms. All your tax information appears on the return, including income and tax liability.
Filing StatusYour filing status determines your tax bracket and amount of taxes you must pay. Factors such as marital status affect your filing status.
Financial AidFinancial support that a student receives to attend school, including loans, grants, scholarships and work-study programs.
Financial StatementsFormal financial reports prepared from accounting records. For example, Profit & Loss Statement, Balance Sheet or Statement of Retained Earnings are all types of financial statements.
First-to-Die Life InsuranceA life insurance policy covering two or more people that pays a death benefit when the first person dies.
Fiscal YearA period of one year for which financial statements are prepared that may, or may not, coincide with the calendar year. Any twelve-month period used by a business as its accounting period.
Fixed AnnuityAn investment contract sold by a life insurance company that guarantees regular payments to the purchaser for life or a specified period of time, in exchange for a premium paid either in a lump sum or in installments.
Fixed AssetsSee Capital Assets
Fixed RateA mortgage with an interest rate which does not increase or decrease during the term of the loan.
Fixed-Rate MortgageA mortgage with a set interest rate that remains the same over the life of the loan.
Floating DebtThe constant renewal of government Treasury bills, or short-term corporate bonds, to pay off current liabilities, or finance cash flow.
Flood InsuranceInsurance against flood damage, usually required by mortgage lenders if a property is located in a flood zone.
For Sale By Owner (FSBO)When a homeowner sells his or her home directly to another party, without the assistance of an agent, or broker.
ForeclosureThe legal procedure by which a mortgage holder can seize the property of a borrower who has not made required payments.
Foreign Corporation

It's time now for your final and practice assignment.

We have decided to offer you choices of your final assignment cases.

The organizations that are the bases for these cases ranges in size,

of course geography and in terms of kind of business they are in.

You should choose to case you're most interested in.

What you're going to do is to use the material presented to you in

this presentation to diagnose the problem at

hand and prescribe actions that can resolve the situation.

When we say diagnose,

we mean to reveal what's really going on in the situation.

What's the role of the FinTech in the cause of the problems?

How is the problem example of changing dynamic and competition?

What are the new innovative capabilities that an organization in the case is missing?

When we say prescribe,

we mean to suggest actions that would set

the organization on the cause of resolving the problem.

What do we need to achieve to change in combination?

What is the transformation required?

In each case, you have questions to answer where you will

bring in what you have learned about the changing competitive dynamics,

the emergence of FinTech and the innovation strategies required to complete successfully.

You will a full written page just to express your answers.

Imagine that you're presenting your ideas to senior executives in the firm.

Executives don't read long documents.

The value concise and persuasive arguments.

Draw on the ideas and concepts from

earlier courses in this presentation to make your arguments. Good luck.

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