Chapter 7 Flashcards
Business plan
Plan developed for a proposed business venture based on a preliminary evaluation and information gathered from research
Goal
The object (or aim) of a person’s ambitions or efforts
Personal financial planning
Process of setting financial goals in order to satisfy a need
Needs
Items of necessity
Wants
Items of desire
Strategy
A plan of action designed to achieve a goal
Budgeting
Process of allocating income and expenditure over a future period
Personal financial statement
Statement listing the items an individual owns (assets) and the amount of debt they owe to someone else (liabilities). (Similar to a balance sheet).
Income statement
Statement showing the income/deficit resulting from income and expenditure over a period
Net worth
Net worth represents the amount of money a person would have left over if all their assets were sold to pay off their debts
Fixed assets
Assets that are real (for example, buildings, equipment, vehicles).
Current liabilities
Debts that are due to be paid within the year
Target annual retirement income
Amount of income required to cover estimated retirement expenses
Annual retirement income
The various sources of income that can be used to fund retirement
Retirement income gap
The surplus or deficit in income required to fund one’s retirement
Freehold home
House where the owner owns the title to the land and has exclusive rights to own, use and occupy it indefinitely
Residential property
Property in which people live
Landlord
Person who owns or leases property
Capital
Wealth that is available to be used to produce more wealth
Floating-rate mortgage
Mortgage where the interest rates rise and fall
Fixed- rate mortgage
Mortgage where the interest rate is set at the beginning of the period and does not change
Deposit
Amount given in part-payment of an asset
Recession
An economic decline or a contraction in business activity
Cash flow statement
Statement showing the inflows and outflows of cash over a defined period of time
