Micro-Enterprise Test 3 Flashcards
The right to take possession of collateral unit a debt is repaid.
Lien
A special type of corporation where individual owners (or members) are taxed on the profits of the company, but the corporation (not the members) is liable for debts or judgements against the company.
Limited Liability Corporation (LLC)
A loan that provides the borrower a maximum amount of money he/she can borrower – the borrower can then access or use that line of credit for only as much money as they need at any particular time.
Line of Credit
Cash or securities that can be immediately turned into cash, which can then repay any loan amount outstanding.
Liquid Assets
The state agency that collects state taxes.
Louisiana Department of Revenue
How a business communicates to large numbers of customers, motivating them to learn more about the business and its offerings. EX. Advertising is a marketing tool. (TV, Radio, Flyers)
Marketing
The date a loan is repaid in full.
Maturity
A person who coaches and supports an entrepreneur or a student studying to become an entrepreneur.
Mentor
The money a person borrows to buy real estate.
Mortgage
An investment security that includes many different stocks purchased and held together. Investors purchase mutual funds because they are less risky than holding any individual stock.
Mutual Fund
“Net” means revenues after cost.
Net Income
A payment that is owed every month.
Obligation
Debt obtained from a number of online companies. Borrowers need to disclose much less information about themselves to obtain online credit, and online credit companies make credit decisions much more quickly than banks. For these reasons, online credit is much more expensive for borrowers than bank loans.
Online Credit
When a company issues a check or makes a financial commitment for an amount greater than the amount the company has deposited in the bank. Also called a “bounced check”.
Overdraft
Costs that a business incurs that are not part of producing the goods or services its sells, but which are required to operate legally and efficiently EX. The salary the businesses pays its accountant is overhead – these funds don’t help us sell more products, but you need your accountant to keep your financial records and submit all required filings.
Overhead
Owning an asset without any associated debt. Ex. You paid off your car so you own it free and clear.
Own “Free and Clear”
When two or more individuals own a company. Partners are taxed on the profits of the company, and are personally liable for any debts or judgements against the company.
Partnership
The amount of money borrowed.
Principal
A Latin phrase (for the sake of form) that in business means a projection of future financial performance. A pro forma usually takes the form of a projection of future revenues and costs.
Pro Forma
The ability to find solutions to difficult or complex issues. The process of working through the details of a challenge or crisis – often under pressure – to reach a solution.
Problem Solving
Revenue minus costs.
Profit
Unit price minus cost of goods sold.
Profits per Unit
Most projections are for a year. A “quarter” means three months. Some businesses make quarterly reports.
Quarter
Real estate is property and the building(s) on it. Real estate can be a piece of land, or can be a home on that piece of land, or it can be a building. Real estate is typically purchased using a mortgage. The down payment the buyer makes is called the buyer’s “equity”.
Real Estate
Debt that includes a legal obligation by the borrower to repay the debt personally if the business is unable to make its scheduled debt payment. A secured debt can be guaranteed by the entrepreneur or by any credit-worthy guarantor.
Secured Debt
