Business Terms Flashcards
Accrual Basis Accounting
Recognizes revenue when earned and expenses when billed
-recorded when the agreement is made between the buyer and seller
Cash Basis Accounting
Recognizes revenue when received and expenses when paid
-recorded when money in exchanged between the buyer and seller
Profit
Measures how your business revenue compares to the costs
Cash Flow
The amount of money flowing in and out of your business from operational, investing, financial activities, etc during a specific period of time
Assets
Anything of value that your business owns
Liabilities
Anything that your business owes
FICO Score
Commonly used rating that ranges from 300-850
Personal Guarantee
A promise to repay a loan, backed by personal assets
Collateral
Is an item of value that pledge as security in exchange for a loan
Annual Percentage Rate (APR)
Is the total cost of a loan over one year, including all fees
Capital Gain
The difference between a securities purchase price and its selling price, when the difference is positive
Common Stock
Securities that represent ownership in a corporation; must be issued by a corporation
Custodian
A bank or trust company holds assets, settles all portfolio trades and collects most of the valuation data required to calculate a funds net asset value
Asset Allocation
The process of dividing investments among cash, income, and growth buckets to optimize the balance between risk and reward based on investment needs
Diversification
The process of owning different investments that tend to perform well at different times in order to reduce the effects of volatility in a portfolio and increase the potential for increasing returns
Equity
Is ownership of assets that may have debts or other liabilities attached to them
Liquidity
Is a market feature whereby an individual or firm can quickly purchase or sell an asset without causing a drastic change in the asset price
The ability to convert an asset into cash easily and without losing money against the market price
Amal Gamation
Is a combination of 2 or more companies to form an entirely new entity
Financing
The process of providing funds for business activities, making purchases, or investing
Leasing
A contract outlining the terms under which 1 party agrees to rent property owned by another party
Credit
The ability of a customer to obtain goods and services before payment, based on the trust that the payment will be made in the future