QBM Portfolio

Tyler Thatcher

Tyler Thatcher

Bus 112

Tuesday/Thursday 2-315

Professor Petrolawicz

Chapter 4

• Defined and stated the purpose of signature cards, checks, deposit slips, check stubs, check registers, and endorsements

• Correctly prepare deposit slips and write checks • Explained trends in the banking industry • Talked about the purpose of the bank statement • Complete a check register and a bank

reconciliation • Explained the trends in online banking pro and

con

Chapter 5• In class we talked about how to solve for unknowns in

equations. Then we learned how to solve for unknowns in word problems.

• Constants Numbers that have a fixed value such as 3 or −7. Placed on right side of equation; also called knowns. 

• Equation Math statement that shows equality for expressions or numbers, or both.

•  Expression A meaningful combination of numbers and letters called terms.

•  Formula Equation that expresses in symbols a general fact, rule, or principle. 

• Knowns Numbers that have a fixed value such as 3 or -7. Placed on right side of equation; also called constants. 

• Unknown The variable we are solving for. • Variables Letters or variables that represent the

unknowns

Chapter 6

• Convert decimals to percents (including rounding percents), percents to decimals, and fractions to percents 

• Convert percents to fractions • List and define the key elements of the portion

formula • Solve for one unknown of the portion formula

when the other two key elements are given • Calculate the rate of percent increases and

decreases

Chapter 6 Cont’d

• Base Number that represents the whole 100%. It is the whole to which something is being compared. Usually follows word of.

• Percent decrease Calculated by decrease in price over original amount.

• Percent increase Calculated by increase in price over original amount.

• Percents Stands for hundredths.

• Portion Amount, part, or portion that results from multiplying the base times the rate. Not expressed as a percent; it is expressed as a number.

• Rate   Percent that is multiplied times the base that indicates what part of the base we are trying to compare to. Rate is not a whole?

Chapter 7• For this chapter we talked about how to calculate single trade discounts with formulas and

complements. Explain the freight terms FOB shipping point and FOB destination. Found list price when net price and trade discount rate are known. Calculate chain discounts with the net price equivalent rate and single equivalent discount rate.

• Cash discount Savings that result from early payment by taking advantage of discounts offered by the seller; discount is not taken on freight or taxes. 

• Chain discounts Two or more trade discounts that are applied to the balance remaining after the previous discount is taken. Often called a series discount. 

• Complement 100% less the stated percent. Example: 18%→ 82% is the complement (100% − 18%).

•  Credit period Credit days are counted from date of invoice. Has no relationship to the discount period.

•  Discount period Amount of time to take advantage of a cash discount.•  Due dates Maturity date, or when the note will be repaid.•  End of credit period Last day from date of invoice when customer can take cash

discount. • End of month (EOM) Cash discount period begins at the end of the month invoice is

dated. After the 25th discount period, one additional month results.•  FOB destination Seller pays cost of freight in getting goods to buyer's location• .FOB shipping point Buyer pays cost of freight in getting goods to his location. • Freight terms Determine how freight will be paid. Most common freight terms are

FOB shipping point and FOB destination.•  Invoice Document recording purchase and sales transactions. • List price Suggested retail price paid by customers. 

Chapter 7 Cont’d•  Ordinary dating Cash discount is available within the discount period. Full

amount due by end of credit period if discount is missed. • Receipt of goods (ROG) Used in calculating the cash discount period;

begins the day that the goods are received.•  Single equivalent discount rate Rate or factor as a single discount that

calculates the amount of the trade discount by multiplying the rate times the list price. This single equivalent discount replaces a series of chain discounts. The single equivalent rate is (1 − Net price equivalent rate). 

• Single trade discount Company gives only one trade discount. • Terms of the sale Criteria on invoice showing when cash discounts are

available, such as rate and time period.•  Trade discount Reduction off original selling price (list price) not related to

early payment•  Trade discount amount List price less net price•  Trade discount rate Trade discount amount given in percent.

• Net price List price less amount of trade discount. The net price is before any cash discount.

•  Net price equivalent rate When multiplied times the list price, this rate or factor produces the actual cost to the buyer. Rate is found by taking the complement of each term in the discount and multiplying them together

Chapter 8• This chapter we discussed markups based on cost and selling price,

markdowns and perishable, and breakeven analysis.• Breakeven point Point at which seller has covered all expenses and costs

and has made no profit or suffered a loss.•  Contribution margin Difference between selling price and variable cost. • Cost Price retailers pay to manufacturer or supplier to bring merchandise

into store.•  Dollar markdown Original selling price less the reduction to price.

Markdown may be stated as a percent of the original selling price.•  Dollar markup Selling price less cost. Difference is the amount of the

markup. Markup is also expressed in percent.•  Fixed cost Costs that do not change with increase or decrease in sales.•  Gross profit Difference between cost of bringing goods into the store and

selling price of the goods. • Margin Difference between cost of bringing goods into store and selling

price of goods.•  Markdowns Reductions from original selling price caused by seasonal

changes, special promotions, and so on. 

Chapter 8 Cont’d

• Markup Amount retailers add to cost of goods to cover operating expenses and make a profit. 

• Net profit (net income) Gross profit less Operating expenses. 

• Operating expenses (overhead) Regular expenses of doing business. These are not costs.

•  Percent markup on cost Dollar markup divided by the cost; thus, markup is a percent of the cost.

• Percent markup on selling price Dollar markup divided by the selling price; thus, markup is a percent of the selling price. 

• Perishables Goods or services with a limited life. 

• Selling price Cost plus markup equals selling price. 

• Variable cost Costs that do change in response to change in volume of sales.

Chapter 10• For this chapter we talked about simple interest and maturity value, finding the

unknown in simple interest formula, and making partial note payments before the due date.

• Adjusted balance Current balance after deduction of interest.•  Banker's Rule Time is exact days/360 in calculating simple interest. • Exact interest Calculating simple interest using 365 days per year in time. • Interest Principal × Rate × Time. • Maturity value Principal plus interest (if interest is charged). Represents

amount due on the due date.•  Ordinary interest Calculating simple interest using 360 days per year in time.•  Principal Amount of money that is originally borrowed, loaned, or deposited. • Simple interest Interest is only calculated on the principal. In I = P × R × T, the

interest plus original principal equals the maturity value of an interest-bearing note. 

• Simple interest formula Principal time rate times time. • Time Expressed as years or fractional years, used to calculate the simple

interest. • U.S. Rule Method that allows the borrower to receive proper interest credits

when paying off a loan in more than one payment before the maturity date.

Chapter 11• Chapter 11 was about the structure of a Promissory Note, simple discount note, and on discounting an

interest-bearing note before maturity.• Bank discount The amount of interest charged by a bank on a note. (Maturity value × Bank discount

rate × Number of days bank holds note) ÷ 360. • Bank discount rate Percent of interest. • Contingent liabilityContingent liability Potential liability that may or may not result from discounting a note. • Discounting a note Receiving cash from selling a note to a bank before the due date of a note. Steps to

discount include: (1) calculate maturity value, (2) calculate number of days bank waits for money, (3) calculate bank discount, and (4) calculate proceeds.

• Discount period Amount of time to take advantage of a cash discount.• Effective rate True rate of interest. The more frequent the compounding, the higher the effective rate.• Face value Amount of insurance that is stated on the policy. It is usually the maximum amount for

which the insurance company is liable. • Interest-bearing note Maturity value of note is greater than amount borrowed since interest is added

on. • Maker One who writes the note.•  Maturity date Date the principal and interest are due. • Maturity value (MV) Principal plus interest (if interest is charged). Represents amount due on the due

date. • Noninterest-bearing note Note where the maturity value will be equal to the amount of money

borrowed since no additional interest is charged. • Payee One who is named to receive the amount of the check.• Proceeds Amount left after discounting. • Promissory note Written unconditional promise to pay a certain sum (with or without interest) at a fixed

time in the future. • Simple discount note A note in which bank deducts interest in advance.• Treasury bill Loan to the federal government for 91 days (13 weeks), 182 days (26 weeks), or 1 year.

Chapter 12• During this chapter we were learning about compound interest future and present value.• Annual percentage yield (APY) Truth in savings law forced banks to report actual interest

in form of APY. Interest yield must be calculated on actual number of days bank has the money.

• Compound amount Final amount of the loan or investment at the end of the last period. Also called compound amount.

• Compounded annually Compounded once a year.• Compounded daily Interest calculated on balance each day.• Compounded monthly Compounded twelve times a year. • Compounded quarterly Compounded four times a year.• Compounded semiannually Compounded twice a year.• Compounding Calculating the interest periodically over the life of the loan and adding it to

the principal. • Compound interest The interest that is calculated periodically and then added to the

principal. The next period the interest is calculated on the adjusted principal (old principal plus interest). 

• Effective rate True rate of interest. The more frequent the compounding, the higher the effective rate.

• Future value (FV) Final amount of the loan or investment at the end of the last period. Also called compound amount.

• Nominal rate Stated rate.• Number of periods Years times number of times compounded in one year. • Present value (PV) How much money will have to be deposited today (or at some date) to

reach a specific amount of maturity (in the future).• Rate for each period ANNUAL Rate divided by number of times compounded in one year.

Chapter 13

• Chapter 13 we discussed Ordinary annuity and annuity due both future and present values. Then learn how to do sinking funds.

• Annuities certain Annuities that have stated beginning and ending dates. 

• Annuity Stream of equal payments made at periodic times.

• Annuity due Annuity that is paid (or received) at the beginning of the time period.

• Contingent annuities Beginning and ending dates of the annuity are uncertain (not fixed).

• Future value of an annuity Future dollar amount of a series of payments.

• Ordinary annuity Annuity that is paid (or received) at end of the time period.

• Payment periods Even series of payments over a period of time.

• Present value of an ordinary annuity Amount of money needed today to receive a specified stream (annuity) of money in the future.

• Sinking fund An annuity in which the stream of deposits with appropriate interest will equal a specified amount in the future. 

• Term of the annuity Time from beginning of the first payment to end of the last payment period.