financial statements vocabulary

Question 1

Process of keeping records. Businesses use accounting to keep track of the things they own, the accounts owed to them, and the amounts they owe to others.

Answer 1

accounting

Question 2

Anything of monetary value that a company owns. This includes cash, accounts receivable, merchandise inventory, equipment, fixtures, supplies, land, and buildings.

Answer 2

assets

Question 3

Statement showing what the business owns (assets) and owes (liabilities) at a given point in time.

Answer 3

balance sheet

Question 4

The amount of money you plan to take in or spend during a certain period.

Answer 4

budget

Question 5

The net worth of a business where assets exceed liabilities (debt); includes assessing the buildings, equipment, tools, and other goods owned without or with minimal.

Answer 5

capital

Question 6

the total amount of money being transferred into and out of a business, especially as affecting liquidity.

Answer 6

cash flow

Question 7

Keeping budgeted costs as close as possible to actual costs.

Answer 7

cost control

Question 8

A formula to determine the cost of materials to produce the cuisine served at your restaurant.

Answer 8

cost of goods sold (COGS)

Question 9

Method used to determine whether a business model can be successful (profitable), by calculating if an individual unit of the good or service would be profitable.

Answer 9

economic of one unit (EOU)

Question 10

Capital that a business raises by taking out a loan. It is a loan made to a company that is normally repaid at some future date.

Answer 10

debt capital

Question 11

Invested money that, in contrast to debt capital, is not repaid to the investors in the normal course of business. It represents the risk capital staked by the owners through the purchase of a company’s common stock (ordinary shares)

Answer 11

equity capital

Question 12

The process of providing funds for business activities, making purchases or investing. Financial institutions such as banks are in the business of providing capital to businesses, consumers and investors to help them achieve their goals.

Answer 12

financing

Question 13

Items that a business owns that are a fairly permanent part of the business and expected to last a long time. Examples: Building, land, factories, major equipment.

Answer 13

fixed assets

Question 14

Costs that do not vary with production or sales level. Example: Rent

Answer 14

fixed costs

Question 15

The difference between Net Sales and Cost of Goods Sold.

Answer 15

gross margin

Question 16

Statement showing your revenue (sales) and expenses for a given period of time.

Answer 16

income statement

Question 17

the amount of money a person puts into their business as capital

Answer 17

investment

Question 18

Any debt an individual owes.

Answer 18

liability

Question 19

Gross Profit minus Total Expenses

Answer 19

net income

Question 20

All costs of running a business, other than the actual cost of merchandise. Examples: salaries, rent, advertising, depreciation, insurance, taxes and maintenance

Answer 20

operating expenses

Question 21

Proposed or estimated financial statements based on predictions of how the actual operations of the business with turn out

Answer 21

pro forma

Question 22

The amount earned as a result of an investment; examples are the percent of interest earned or the stake held in a company

Answer 22

return on investment (ROI)

Question 23

include the capital, skilled labor, management expertise, legal and financial advice, facility, equipment, and customers needed to start a business

Answer 23

start-up resources

Question 24

Costs that change directly with the amount of production. Example: raw materials.

Answer 24

variable costs

Question 25

A tax on retail products, goods, and services. It is based on a certain percentage (generally set by the state) of the price.

Answer 25

sales tax

Question 26

tax that an employer withholds from an employee’s salary and pays on behalf of his employees. The payroll tax is based on the wage or salary of the employee.

Answer 26

payroll tax

Question 27

tax that governments impose on income generated by businesses and individuals within their jurisdiction

Answer 27

income tax

Question 28

The imposed tax that a small business owner must pay to the federal government to fund Medicare and Social Security; due when an individual has net earnings of $400 or more in self-employment income over the course of the tax year.

Answer 28

self-employment tax

Question 29

This tax includes contributions to two federal programs, Social Security and Medicare.

Answer 29

federal insurance contribution act (FICA)

Question 30

provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a Federal and a state unemployment tax

Answer 30

the federal unemployment tax act (FUTA)