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how does the 80 20 rule work | you may think of the 80 20 rule as simple cause and effect 80 of outcomes outputs come from 20 of causes inputs the rule is often used to point out that 80 of a company s revenue is generated by 20 of its customers viewed in this way it might be advantageous for a company to focus on the 20 of clients that are responsi... | |
what s the 80 20 rule | the 80 20 rule is a principle that states 80 of all outcomes are derived from 20 of causes it s used to determine the factors typically in a business situation that are most responsible for success and then focus on them to improve results the rule can be applied to circumstances beyond the realm of business too | |
what does the 80 20 rule mean | at its heart the 80 20 rule simply underscores the importance of exerting your energy on those aspects of your business or life sports activity musical performance blog etc that get you the best results however it does not mean people should then ignore the areas that are less successful it s about prioritizing focus a... | |
what is the 83 b election | the 83 b election is a provision under the internal revenue code irc that gives an employee or startup founder the option to pay taxes on the total fair market value of restricted stock at the time of granting | |
how to file an 83 b election | the 83 b election applies to equity that is subject to vesting and it alerts the internal revenue service irs to tax the elector for the ownership at the time of granting rather than at the time of stock vesting 1the 83 b election documents must be sent to the irs within 30 days after the issuing of restricted shares i... | |
when is it beneficial to file 83 b election | an 83 b election allows for the pre payment of the tax liability on the total fair market value of the restricted stock at the time of granting it is beneficial only if the restricted stock s value increases in the subsequent years also if the amount of income reported is small at the time of granting an 83 b election ... | |
what happens if you don t make an 83 b election | failing to make an 83 b election can have significant tax consequences for individuals who receive restricted stock or other property subject to vesting when restricted stock or property vests you ll be taxed on its value as ordinary income at that time potentially resulting in higher taxes without the election any fut... | |
when is it detrimental to file 83 b election | if an 83 b election was filed with the irs and the equity value falls or the company files for bankruptcy then the taxpayer overpaid in taxes for shares with a lesser or worthless amount unfortunately the irs does not allow an overpayment claim of taxes under the 83 b election another instance is if the employee leaves... | |
what is profits interest | profits interest refers to an equity right based on the future value of a partnership awarded to an individual for their service to the partnership the award consists of receiving a percentage of profits from a partnership without having to contribute capital in effect it is a form of equity compensation and is used as... | |
what is an 8 a firm | an 8 a firm is a small business that is owned and operated by socially and economically disadvantaged citizens and that has been accepted into the 8 a business development program this program is administered by the small business administration sba the united states agency charged with supporting the growth and develo... | |
how 8 a firm status works | the 8 a status is specially granted by the sba to any small business that qualifies making it eligible for financial assistance training mentoring and other forms of assistance in order to qualify for this special status businesses must be owned and operated by individuals who are considered socially and economically d... | |
definition of 90 day letter | 90 day letter is an irs notice stating that there was a discrepancy or error within an individual s taxes and they will be assessed unless petitioned the taxpayer has 90 days to respond otherwise the audit deficiencies will result in reassessment also known as a notice of deficiency breaking down 90 day letteronce you ... | |
what the notice means | if you don t dispute the accuracy of the assessment the internal revenue service has made you won t need to amend your tax return unless you have additional income expenses or credits that you want to report in that case all you need to do is sign form 5564 notice of deficiency and return it to the irs with a check att... | |
what is the 90 10 strategy | legendary investor warren buffett proposed the 90 10 strategy in his 2013 chairman s letter to berkshire hathaway shareholders the strategy calls for putting 90 of one s investment capital into low cost stock index funds and the remaining 10 in low risk government bonds 1it differs from many common investing strategies... | |
how the 90 10 strategy works | for decades now warren buffett s annual chairman s letters have been eagerly awaited by his shareholders and countless investors eager to emulate his success his 2013 letter covered a variety of topics with a single paragraph devoted to the 90 10 strategy nonetheless that was sufficient to bring it to wide attention wh... | |
what are the advantages of a 90 10 investment allocation | the primary advantage of a 90 10 allocation is the potential for higher long term returns due to the significant exposure to stocks this strategy may be suitable for investors with a high risk tolerance and a long investment horizon such as those saving for a retirement decades in the future | |
is the 90 10 allocation suitable for conservative investors | generally the 90 10 allocation is considered aggressive and is not suitable for conservative investors conservative investors typically prioritize capital preservation over potential growth and may find the strategy too risky or volatile | |
how often should i rebalance a 90 10 investment portfolio | rebalancing should be done periodically typically annually or when your portfolio deviates significantly from your target allocation it involves adjusting your holdings to maintain the desired asset allocation in this case 90 10 stocks bonds consider setting a threshold where you rebalance regardless of the passage of ... | |
what is an a b trust | an a b trust is a joint trust created by a married couple for the purpose of minimizing estate taxes it is formed with each spouse placing assets in the trust and naming as the final beneficiary any suitable person except the other spouse the trust gets its name from the fact that it splits into two separate entities w... | |
what are the benefits of an a b trust | the benefits of an a b trust include death tax exemptions built in trust protection and the portability of exemption disadvantages include maintenance costs complex structure and the possibility of large capital gains taxes after both parties die | |
why is an a b trust obsolete | a b trusts aren t completely obsolete but they are not as common as they once were due to changes in estate tax law primarily the fact that a couple now has extremely high estate tax exemptions a b trusts are primarily used to reduce estate taxes between married couples | |
what is another name for an a b trust | a b trusts are also known as bypass trusts or credit shelter trusts the goal of these trusts is to reduce estate taxes between married couples the bottom linea b trusts are beneficial in estate planning to reduce taxes but have not been required in recent years due to the higher estate tax exemptions it s worth working... | |
what are china a shares | china a shares are the stock shares of mainland china based companies that trade on the two chinese stock exchanges the shanghai stock exchange sse and the shenzhen stock exchange szse historically china a shares were only available for purchase by mainland citizens due to china s restrictions on foreign investment how... | |
what is a aaa credit rating | aaa is the highest possible rating that may be assigned to an issuer s bonds by any of the major credit rating agencies aaa rated bonds have a high degree of creditworthiness because their issuers are easily able to meet financial commitments and have the lowest risk of default rating agencies standard poor s s p and f... | |
why is a credit rating so important | the level of credit rating that an issuer receives has significant implications on the cost of borrowing in the open market the better the credit rating with aaa being the best the lower the cost to borrow and vice versa as an investor you ll need to balance the risk you re willing to take against the yield you re seek... | |
what does the aaa credit rating mean | the aaa credit rating is only given to the most creditworthy debt issuers and allows investors to gauge the amount of risk in their fixed income portfolio conservative investors will typically sacrifice return or yield to own the highest credit rating issues available the bottom linecredit ratings are assigned to debt ... | |
what is aarp | aarp previously known as the american association of retired persons is america s leading organization for people aged 50 and older it is an association that provides benefits marketing services and lobbying on behalf of members founded in 1958 by retired educator dr ethel percy andrus aarp is a nonprofit nonpartisan a... | |
how aarp works | aarp provides information education research advocacy and community services through a nationwide network of local chapters and experienced volunteers it focuses its work on consumer issues economic security work health and independent living issues aarp engages in legislative judicial and consumer advocacy in these ar... | |
what does aarp stand for | the acronym aarp originally stood for the american association of retired persons the organization officially changed its name to aarp in 1999 as a way of recognizing that many members were not yet retired or continued to work part time 5 | |
how old do you need to be to join aarp | though the mission of aarp focuses on serving and advocating for the needs of those ages 50 and above adults 18 years and older are eligible for membership all members can access aarp benefits except those that are legally or contractually restricted by age such as age restricted insurance plans 6 | |
what political candidates does aarp support | aarp is a nonpartisan organization that does not make contributions to campaigns or political parties and does not endorse candidates the organization does advocate for voter engagement and lobby on issues that impact americans over the age of 50 some of these issues include legislation to regulate social security medi... | |
what is abenomics | abenomics is the nickname for the economic policies set out for japan in 2012 when prime minister shinzo abe came into power for a second time abenomics involved increasing the nation s money supply boosting government spending and enacting reforms to make the japanese economy more competitive the economist outlined th... | |
what is ability to pay taxation | the ability to pay philosophy of taxation maintains that taxes should be levied according to a taxpayer s ability to pay underlying this is the idea is that people businesses and corporations with higher incomes can and should pay more in taxes the ability to pay principle is also known as progressive taxation understa... | |
what is a tax levied equally | flat taxes are those which are levied at the same rate for all payers this is the inverse of the ability to pay principle also known as a regressive tax system | |
what are main types of taxes | common types of taxes include income tax corporate tax sales tax property tax and tariffs income tax is levied on an individual s earnings while corporate tax is levied on a company s sales taxes are collected at points of sale while tariffs are collected when a good or service is imported or exported property taxes ar... | |
why is progressive taxation good | proponents of progressive taxation argue that progessive taxation is a fair to ensure that a tax system is fair especially as it can help reduce inequality in wealth and income in a society however critics warn that there are limitations to progressive taxation as well including the risk of disincentivizing work or exp... | |
what is an abnormal return | an abnormal return describes the unusually large profits or losses generated by a given investment or portfolio over a specified period the performance diverges from the investments expected or anticipated rate of return ror the estimated risk adjusted return based on an asset pricing model or using a long run historic... | |
what is absolute advantage | absolute advantage is the ability of an individual company region or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs than its competitors absolute advantag... | |
has been used to justify exploitative policies | example of absolute advantageconsider two hypothetical countries atlantica and pacifica with equivalent populations and resource endowments with each producing two products butter and bacon each year atlantica can produce either 12 tubs of butter or six slabs of bacon while pacifica can produce either six tubs of butte... | |
how can absolute advantage benefit a nation | the concept of absolute advantage was developed by adam smith in the wealth of nations to show how countries can gain by specializing in producing and exporting the goods that they produce more efficiently than other countries and by importing goods that other countries produce more efficiently specializing in and trad... | |
how does absolute advantage differ from comparative advantage | absolute advantage is the ability of an entity to produce a product or service at a lower absolute cost per unit using a smaller number of inputs or a more efficient process than another entity producing the same good or service comparative advantage refers to the ability to produce goods and services at a lower opport... | |
what are examples of nations with an absolute advantage | a clear example of a nation with an absolute advantage is saudi arabia a country with abundant oil supplies that provide it with an absolute advantage over other nations 7other examples include colombia and its climate ideally suited to growing coffee and zambia possessing some of the world s richest copper mines 89 fo... | |
what is absolute return | absolute return is the return that an asset achieves over a specified period this measure looks at the appreciation or depreciation expressed as a percentage that an asset such as a stock or a mutual fund achieves over a given period absolute return differs from relative return because it is concerned with the return o... | |
how absolute return works | absolute return refers to the amount of funds that an investment has earned also referred to as the total return the absolute return measures the gain or loss experienced by an asset or portfolio independent of any benchmark or other standard returns can be positive or negative and may be considered uncorrelated to oth... | |
what is absorption costing | absorption costing sometimes called full costing is a managerial accounting method for capturing all costs associated with manufacturing a particular product all direct and indirect costs such as direct materials direct labor rent and insurance are accounted for when using this method under generally accepted accountin... | |
what s the difference between variable costing and absorption costing | absorption costing and variable costing treat fixed overhead costs differently absorption costing allocates fixed overhead costs across all units produced for the period variable costing on the other hand adds all fixed overhead costs together and reports the expense as one line item separate from the cost of goods sol... | |
what are the advantages of absorption costing | the main advantage of absorption costing is that it complies with generally accepted accounting principles gaap which are required by the internal revenue service irs furthermore it takes into account all of the costs of production including fixed costs not just the direct costs and more accurately tracks profit during... | |
what are the disadvantages of absorption costing | the main disadvantage of absorption costing is that it can inflate a company s profitability during a given accounting period as all fixed costs are not deducted from revenues unless all of the company s manufactured products are sold additionally it is not helpful for analysis designed to improve operational and finan... | |
when is it appropriate to use absorption costing | absorption costing is typically used in situations where a company wants to understand the full cost of producing a product or providing a service this includes cases where a company is required to report its financial results to external stakeholders such as shareholders or regulatory agencies absorption costing is al... | |
what are the types of absorption costing | there are two main types of absorption costing full absorption costing and partial absorption costing the bottom lineabsorption costing is a method of costing that includes all manufacturing costs both fixed and variable in the cost of a product it is also known as full costing or full absorption costing absorption cos... | |
what is absorption rate in real estate | the absorption rate is used in the real estate market to evaluate the rate at which available homes are sold in a specific market during a given period it is calculated by dividing the number of homes sold in the allotted period by the total number of available homes 1 this equation can also be reversed to identify the... | |
what is accelerated depreciation | accelerated depreciation is any method of depreciation used for accounting or income tax purposes that allows greater depreciation expenses in the early years of the life of an asset accelerated depreciation methods such as double declining balance ddb mean there will be higher depreciation expenses in the first few ye... | |
what do accelerated depreciation methods do | accelerated depreciation methods usually align the recognized rate of an asset s depreciation with its actual use but this isn t technically required this alignment usually occurs because an asset is most heavily used when it s new functional and at its most efficient | |
what is the rationale behind accelerated depreciation methods | the rationale behind an accelerated depreciation method is that it appropriately matches how the asset is used as an asset ages it is not used as heavily it is slowly being phased out for newer assets | |
how does the accelerated depreciation method affect financial reporting | because depreciation is accelerated expenses are higher in earlier periods compared to later periods companies may utilize this strategy for taxation purposes because an accelerated depreciation method will result in deferred tax liabilities since income is lower in earlier periods | |
what are the types of accelerated depreciation methods | there are two main types the bottom lineaccelerated depreciation refers to any depreciation method used for accounting or income tax purposes that allows greater depreciation expenses in an asset s early years accelerated depreciation methods mean higher depreciation expenses in the first few years and lower expenses a... | |
what is an acceleration clause | an acceleration clause is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if certain requirements are not met an acceleration clause outlines the reasons that the lender can demand loan repayment and the repayment required it is also known as an acceleration covenant ... | |
what is acceptable quality level aql | the acceptable quality level aql is a measure applied to products and defined in iso 2859 1 as the quality level that is the worst tolerable the aql tells you how many defective components are considered acceptable during random sampling quality inspections it is usually expressed as a percentage or ratio of the number... | |
how acceptable quality level aql works | goods in a sample are tested at random and if the number of defective items is below the predetermined amount that product is said to meet the acceptable quality level aql if the acceptable quality level aql is not reached for a particular sampling of goods manufacturers will review the various parameters in the produc... | |
what factors are used to determine if aql is being met | to calculate aql you need the lot or batch size the inspection type inspection level and the desired aql there are aql calculators available online if your lot or batch size is 50 000 your inspection type is general your inspection level is 2 and your aql level is 2 5 you would need a sample size of 500 units with only... | |
what does an aql of 2 5 mean | an aql of 2 5 means that only 2 5 of an order can be defective in order for it to be acceptable if more than 2 5 of the other is defective then it doesn t meet the agreement between the buyer and producer so for example if 20 000 pairs of shorts are ordered only 1 250 can be defective to reach an aql of 2 5 | |
what is the standard aql | there is no standard aql aql changes based on product and industry for example in the medical industry aql must be very low because defects in medical equipment or products can be harmful to consumers in clothing manufacturing aql might be higher however it all comes down to what the buyer and producer agree upon when ... | |
what does accepting risk mean | accepting risk or risk acceptance occurs when a business or individual acknowledges that the potential loss from a risk is not great enough to warrant spending money to avoid it also known as risk retention it is an aspect of risk management commonly found in the business or investment fields risk acceptance posits tha... | |
what is accidental death and dismemberment ad d insurance | accidental death and dismemberment ad d insurance is insurance usually added as a rider to a health or life insurance policy that covers the unintentional death or dismemberment of the insured dismemberment includes the loss or the loss of use of body parts or functions such as limbs speech eyesight and hearing because... | |
how accidental death and dismemberment ad d insurance works | ad d insurance contains a schedule that details the terms and percentages of the various benefits and covered special circumstances for example if an insured dies from injuries sustained in an accident the death must occur within a specified period for benefits to be paid 2accidental death | |
when adding an ad d rider also known as a double indemnity rider to a life insurance policy the designated beneficiaries receive benefits from both the rider and the underlying policy if the insured dies accidentally | benefits typically cannot exceed a certain amount as detailed in the rider as most ad d insurance payments mirror the face value of the original life insurance policy the beneficiary normally receives a benefit twice the amount of the life insurance policy s face value upon the accidental death of the insured typically... | |
how much such a policy pays depends not only on the amount of coverage purchased but also on the type of claim filed for example the policy might pay 100 if the policyholder is killed or becomes quadriplegic but only 50 for the loss of a hand or the permanent loss of hearing in one ear or sight in one eye | common exclusionseach insurance provider includes a list of exclusions in most instances the list includes suicide death from illness or natural causes and wartime injuries other common exclusions include death resulting from the overdose of toxic substances death while under the influence of nonprescription drugs suic... | |
what is ad d insurance | accidental death and dismemberment ad d insurance pays benefits in the case of a person s accidental death or dismemberment while it is usually added as a rider on a life insurance policy it can also be purchased as standalone coverage | |
what is the difference between life insurance and ad d insurance | accidental death and dismemberment ad d coverage only pays a benefit if death results from a covered accident or upon the loss or loss of use of a limb in contrast coverage is broader with life insurance life insurance policies pay benefits upon the death of the insured despite how the death occurred note exceptions ap... | |
what is voluntary ad d insurance | voluntary accidental death and dismemberment vad d insurance is an optional financial protection plan typically sold in the workplace that covers the same situations that regular ad d insurance does it is often purchased by workers in occupations that come with physical risk | |
does ad d cover heart attacks | although unexpected a heart attack is considered a natural cause of death and is therefore typically excluded from ad d coverage there is one exception to this exclusion if the heart attack was precipitated by the accident most ad d policies will pay the stated benefit for example if an insured with no underlying heart... | |
how much does ad d insurance cost | ad d coverage is relatively inexpensive compared to traditional term and whole life insurance costs can be as little as a few dollars per month however rates vary according to the type of ad d coverage issued and the insurer 9the bottom lineaccidental death and dismemberment ad d is a type of insurance policy that pays... | |
what is an accidental death benefit | accidental death benefit is a payment due to the beneficiary of an accidental death insurance policy which is often a clause or rider connected to a life insurance policy the accidental death benefit adb life insurance policy usually pays in addition to the standard benefit payable if the insured died of natural causes... | |
what is considered accidental death | insurance companies define accidental death as an event that strictly occurs as a result of an accident deaths from car crashes slips choking drowning machinery and any other situations that can t be controlled are deemed accidental in the case of a fatal accident death usually must occur within a period specified in t... | |
what is considered accidental death for insurance purposes | insurance companies consider accidental death to be an event that causes your death as the result of an accident for example most car crashes falls down the stairs machinery choking and even drowning are circumstances beyond your control and thus counted as accidental | |
what is accidental death and dismemberment insurance | accidental death and dismemberment insurance covers you in the case of accidental death or if you lose a limb or other significant injuries in an accident that causes you to stop working besides being dismembered the insurance may include workplace injuries injuries caused by a fire or flood accidents with firearms or ... | |
are accidental death and dismemberment ad d insurance and accidental death benefit adb the same thing | accidental death and dismemberment ad d and accidental death benefit adb policies both pay a benefit the main difference is that an ad d policy will pay if the insured is dismembered or injured whereas the adb only pays a benefit if the insured dies the bottom lineaccidental death benefits are paid to beneficiaries of ... | |
what is an account balance | an account balance is the amount of money in a financial repository such as a savings or checking account the account balance factors all debits and credits an account balance is also evident on billing statements for credit cards utilities and loans calculating account balancesan account balance reflects total assets ... | |
how can individuals check a bank account balance | account holders can check balances by signing in to their bank s app or website and looking at their latest transactions or by visiting the local branch and speaking with a representative | |
what kinds of accounts have account balances | checking savings and brokerage accounts all have account balances however expenses like utility bills mortgage loans or credit cards also have account balances | |
what s available credit | available credit refers to the amount remaining on the credit line the available credit can be determined by subtracting the account balance from the credit limit the bottom linean account balance represents the available funds in a financial account such as a checking savings or investment account an account balance i... | |
what is an account in trust | an account in trust or trust account refers to any type of financial account that is opened by an individual and managed by a designated trustee for the benefit of a third party per agreed upon terms for example a parent can open a bank account for the benefit of their minor child and stipulate rules as to when the min... | |
how an account in trust works | accounts in trust can hold different assets including cash stocks bonds mutual funds real estate and other property and investments 1 trustees can vary as well they can be the person opening the account someone else they designate as a trustee or a financial institution such as a bank or brokerage firm trustees have th... | |
how to set up an account in trust | before setting up the account in trust review your available options and choose the one that best suits your needs there are several details to consider beforehand however for example identify who you want to manage the trust and how you want it managed during your life and upon death considering death identify who you... | |
what is a bank account number | a bank account number is a unique string of numbers and sometimes letters and other characters that identify a particular bank account and grant access to it this often is one of the most important account numbers people have for transacting business | |
how a bank account number works | a bank checking account s number is located at the bottom of the paper check you ll see three sets of numbers in a computer readable font at the bottom of the check payroll processing offices use checking account numbers to set up direct deposit payments for employees protecting bank account numbersbank account numbers... | |
how to locate your bank account number | you can find your bank account number on your monthly bank statement or by visiting a branch of your bank if you are using a checking account the account number is also printed on your paper checks you can find it printed between the bank s routing number and the check number as shown below | |
how do you find the account number on a check | you can find your bank account number printed at the bottom of your paper check this is the second sequence of numbers printed between the nine digit routing number and the shorter check number this number can also be found on your account statement 1 | |
how long is a bank account number | a bank account number is usually eight to 12 digits long but some account numbers have up to 17 digits note that this is not the same as your debit card number or credit card number 4 | |
how do you find out your account number | you can find your bank account number on your bank statements printed at the bottom of a paper check or by logging on to the bank s website if you can t find it in these ways try visiting a bank branch in person the bottom linea bank account number is a unique identifier for each account at a bank or other financial in... | |
what is an account statement | an account statement is a periodic summary of account activity with a beginning date and an ending date the most commonly known are checking account statements usually provided monthly and brokerage account statements which are provided monthly or quarterly monthly credit card bills are also considered account statemen... | |
how account statements are used | account statements should be scrutinized for accuracy and historical statements are critical for budgeting a credit or loan account statement for example may show not only the outstanding balance due but the interest rate charged on that debt and any fees that have been added during the payment cycle this can include l... | |
what should i do if i notice an error or discrepancy on my account statement | if you notice an error or discrepancy on your account statement contact your bank immediately provide them with the details of the incorrect transaction and they will initiate an investigation to rectify the issue and ensure your account is accurate | |
how long should i keep my account statements | the recommended duration for keeping account statements varies but it s generally advised to retain them for a minimum of one to three years however consult with a financial advisor if you re unsure what account information should be retained especially related to tax statements investment statements or banking stateme... | |
are there any fees associated with receiving paper account statements | some financial institutions may charge fees for providing paper account statements electronic statements are often offered as a free alternative or may have lower associated costs check with your bank for their specific fee structure and any incentives for switching to electronic statements | |
how can i use my account statements for budgeting and financial planning | account statements can be used for budgeting and financial planning by analyzing income expenses and patterns of spending review your statements to track where your money goes identify areas for potential savings and make informed decisions about budget adjustments or financial goals the bottom lineaccount statements p... | |
what is accountability | the term accountability refers to the acceptance of responsibility for honest and ethical conduct toward others in the corporate world a company s accountability extends to its shareholders employees and the wider community in which it operates in a wider sense accountability implies a willingness to be judged on perfo... | |
what does accountability mean | accountability is the practice of being held to a certain standard of excellence it is the idea that an individual is responsible for their actions and if that individual chooses unfavorable actions they will face consequences accountability strives to promote a high level of work promote honesty encourage dependabilit... | |
what is an example of accountability | a company can foster a sense of accountability by setting expectations with employees delegating tasks to different members of a team and explaining the consequences if the tasks are completed incorrectly or late another example of accountability is a financial advisor managing a client s funds the advisor must not onl... | |
how is accountability defined in the workplace | to management coaches accountability in the workplace goes beyond giving each employee a task to complete in a project it also means making each individual accountable for the success or failure of their contribution to the overall project 14 in other words it s all about the ownership of success or failure |
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