A record of financial transactions. Businesses that extend credit to their customers maintain an account of their transactions.
Amounts owed by a business that are payable within one year. These are listed in the current liabilities section of a balance sheet.
Money owed to a business for goods and services the business has sold. These are listed in the current assets section of a balance sheet.
A long term expense calculated on a monthly or periodic cost basis. A payment process by which the borrower gradually writes off the initial cost of an asset through payments of principal and interest.
A rise in value of your business's goods or services. Represented as a credit on your balance sheet.
Everything a business owns. These include cash, equipment, securities, accounts receivable, merchandise as well as intangible assets such as trademarks and patents.
A financial statement that shows what a business owns and what it owes at a certain date. Also called a statement of financial position.
The value of a business as presented by the excess of the total assets over the total liabilities. Factors such as depreciation will affect book value.
A plan detailing the setting up, operation and direction your business will take. A business plan is a management tool used to focus on objectives as well as a resource when looking for financing.
Money available for investment. The amount of money owners have invested in their business.
Money on hand and deposits in banks. Cash is a business asset.
Short term, temporary securities that can be quickly converted to cash. Included in the assets of a business.
The flow of cash in and out of a business. Positive cash flow means having enough cash to meet your operating needs and to pay your bills on time. It is an important sign of a healthy and stable business.
Money set aside for unexpected or unbudgeted expenses. Usually the equivalent of 3 to 6 months net income. Also called contingency.
A legally binding agreement between parties (individuals, businesses, governments, organizations, etc.) for goods or services at a specified price.
A form of business organization having a legal entity independent of its owners. The corporation's owners (shareholders) have no liability for its debts.
Assets a company can liquidate to cash within one year.
Obligations a company has to others, payable within one year.
Raw materials, items available for sale or in the process of being made ready for sale. Inventory can be individually valued by several different means, including cost or current market value.
The ratio by which debt exceeds equity. The use of debt instead of equity to support assets and growth.
A legal claim over an asset.
A type of business where owners assume responsibility for only up to the amount they invested.
Line of Credit
Money lent at interest. Discretionary money lent by a bank for operating expenses.
Convert an asset to cash or settle a debt.
The value of something in the market-place, determined by an agreement between two disinterested parties.
All activities involved in creating an interest or desire for your product or service.
Part of stock markets in which short term financial obligations are bought and sold. These include treasury bills and other federal government debts of up to three years.
The total earnings of a company for a set period, minus deductions and expenses. Also called net profit or net income.
The total sales of a company minus returned merchandise and discounts.
ny minus the cost of the sales and operating expenses.
A loan to assist in coverage of current business expenses.