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Financial Terms | |
Federal Reserve System |
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Definition of Federal Reserve SystemFederal Reserve SystemThe central bank of the U.S., established in 1913, and governed by the federal Federal Reserve SystemThe central banking authority responsible for monetary policy in the United States.
Related Terms:Bank for International Settlements (BIS)An international bank headquartered in Basel, Switzerland, which FedSee federal reserve system. Federal Reserve BanksThe twelve district banks in the federal reserve system. Federal Reserve BoardBoard of Governors of the federal reserve system. FedwireA wire transfer system for high-value payments operated by the federal reserve system. Monetary policyActions taken by the Board of Governors of the federal reserve system to influence the ![]() Accelerated cost recovery system (ACRS)Schedule of depreciation rates allowed for tax purposes. Accounting systemA set of accounts that summarize the transactions of a business that have been recorded on source documents. actual cost systema valuation method that uses actual direct Automated storage/retrieval systemA racking system using automated systems business intelligence (BI) systema formal process for gathering and analyzing information and producing intelligence to meet decision making needs; requires information about charge-back systema system using transfer prices; see transfer Clearing House Automated Payments System (CHAPS)A computerized clearing system for sterling funds Clearing House Interbank Payments System (CHIPS)An international wire transfer system for high-value Cookie Jar ReservesAn overly aggressive accrual of operating expenses and the creation of cost control systema logical structure of formal and/or informal cost management system (CMS)a set of formal methods Du Pont systemA breakdown of ROE and ROA into component ratios. Dupont system of financial controlHighlights the fact that return on assets (ROA) can be expressed in terms Electronic Federal Tax Payment Systems (EFTPS)An electronic funds transfer system used by businesses to remit taxes to the government. enterprise resource planning (ERP) systema packaged software program that allows a company to Enterprise resource planning systemA computer system used to manage all company European Monetary System (EMS)An exchange arrangement formed in 1979 that involves the currencies Excess reservesAny excess of actual reserves above required reserves. Excess Reservesreserves of commercial banks in excess of those they are legally required to hold. Federal agency securitiesSecurities issued by corporations and agencies created by the U.S. government, Federal credit agenciesAgencies of the federal government set up to supply credit to various classes of Federal Deposit Insurance Corporation (FDIC)A federal institution that insures bank deposits. Federal Employer Identification NumberA unique identification number issued Federal Financing BankA federal institution that lends to a wide array of federal credit agencies funds it Federal fundsNon-interest bearing deposits held in reserve for depository institutions at their district federal Federal funds marketThe market where banks can borrow or lend reserves, allowing banks temporarily Federal funds rateThis is the interest rate that banks with excess reserves at a federal reserve district bank Federal Funds RateThe interest rate at which banks lend deposits at the federal reserve to one another overnight. Federal Home Loan BanksThe institutions that regulate and lend to savings and loan associations. The Federal Insurance Contributions Act of 1935 (FICA)A federal Act authorizing the government to collect Social Security and Medicare payroll taxes. Federal Open Market Committee (FOMC)Fed committee that makes decisions about open-market operations. Federal Reserve (the Fed)The central bank in the United States, responsible for setting interest rates. Federal Unemployment Tax Act (FUTA)A federal Act requiring employers to pay a tax on the wages paid to their employees, which is then used to create a Federally related institutionsArms of the federal government that are exempt from SEC registration and flexible manufacturing system (FMS)a production system in which a single factory manufactures numerous variations Foreign Exchange ReservesA fund containing the central bank's holdings of foreign currency or claims thereon. Fractional Reserve BankingA banking system in which banks hold only a fraction of their outstanding deposits in cash or on deposit with the central bank. Freddie Mac (Federal Home Loan Mortgage Corporation)A Congressionally chartered corporation that Free reservesExcess reserves minus member bank borrowings at the Fed. hybrid costing systema costing system combining characteristics Imputation tax systemArrangement by which investors who receive a dividend also receive a tax credit for Interac systemCanada's bank machine and electronic debit system. If you use your bank card at a bank machine which displays the Interac symbol (and that bank machine is not your bank's machine), you will be charged a fee. International ReservesSee foreign exchange reserves. job order costing systema system of product costing used Just-in-time inventory systemssystems that schedule materials/inventory to arrive exactly as they are just-in-time manufacturing systema production system that attempts to acquire components and produce inventory only as needed, to minimize product defects, and to Legal Reserve RequirementSee reserve requirement. lock-box systemsystem whereby customers send payments to a post office box and a local bank collects and processes checks. MACRS (Modified Accelerated Cost Recovery System)A depreciation method created by the IRS under the Tax Reform Act of 1986. Companies must use it to depreciate all plant and equipment assets installed after December 31, 1986 (for tax purposes). management control system (MCS)an information system that helps managers gather information about actual organizational occurrences, make comparisons against plans, management information system (MIS)a structure of interrelated elements that collects, organizes, and communicates Modified Accelerated Cost Recovery System (MACRS)Depreciation method that allows higher tax deductions in early years and lower deductions later. Multirule systemA technical trading strategy that combines mechanical rules, such as the CRISMA Nonsystematic riskNonmarket or firm-specific risk factors that can be eliminated by diversification. Also normal cost systema valuation method that uses actual Official reservesHoldings of gold and foreign currencies by official monetary institutions. Overdraft Systemsystem whereby a depositor may write cheques in excess of the balance, with the bank automatically extending a loan to cover the shortage. performance management systema system reflecting the entire package of decisions regarding performance measurement and evaluation Periodic inventory systemAn inventory system in which the balance in the Inventory account is adjusted for the units sold only at the end of the period. Perpetual inventory systemAn inventory system in which the balance in the Inventory account is adjusted for the units sold each time a sale is made. Planning, programming and budgeting system (PPBS)A method of budgeting in which budgets are allocated to projects or programmes rather than to responsibility centres. PLUS systemA bank machine network outside Canada, across the U.S. and internationally. Customers who use a bank machine with a 'PLUS' symbol may be charged a fee. Price SystemSee market mechanism. process costing systema method of accumulating and assigning costs to units of production in companies producing large quantities of homogeneous products; Progressive tax systemA tax system wherein the average tax rate increases for some increases in income but pull systema production system dictated by product sales Pull systemA materials flow concept in which parts are only withdrawn after a push systemthe traditional production system in which Push systemA materials flow concept in which parts are issued based on planned red-line systeman inventory ordering system in which a red Required reservesThe dollar amounts based on reserve ratios that banks are required to keep on deposit at a federal reserve Bank. Required Reservesreserves that the central bank requires commercial banks to hold. ReserveAn accounting entry that properly reflects the contingent liabilities. Reserve currencyA foreign currency held by a central bank or monetary authority for the purposes of Reserve CurrencyA currency, frequently the U.S. dollar, that is used by other countries to denominate the assets they hold as international reserves. Reserve RatioSee reserve requirement. Reserve RatioThis calculation is used by states to determine the unemployment contribution rate to charge employers. The ongoing balance of a firm’s unclaimed Reserve ratiosSpecified percentages of deposits, established by the federal reserve Board, that banks must Reserve RequirementFraction of total deposits that a commercial bank is required by the central bank to hold in the form of reserves. Reserve requirementsThe percentage of different types of deposits that member banks are required to hold Reserved materialMaterial that has been reserved for a specific purpose. ReservesCommercial banks' reserves consist of their holdings of cash and their balances in deposits with the central bank. See also foreign exchange reserves, excess reserves, required reserves, reserve requirement. responsibility accounting systeman accounting information system for successively higher-level managers about the performance of segments or subunits under the control Split-rate tax systemA tax system that taxes retained earnings at a higher rate than earnings that are standard cost systema valuation method that uses predetermined SystematicCommon to all businesses. Systematic riskAlso called undiversifiable risk or market risk, the minimum level of risk that can be Systematic RiskThe amount of total risk that cannot be eliminated by portfolio Systematic risk principleOnly the systematic portion of risk matters in large, well-diversified portfolios. systematic withdrawal planPlans offered by mutual fund companies that allow unitholders to receive payment from their investment at regular intervals. two-bin systeman inventory ordering system in which two Two-bin systemA system in which parts are reordered when their supply in one Related to : financial, finance, business, accounting, payroll, inventory, investment, money, inventory control, stock trading, financial advisor, tax advisor, credit. |