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17 Cards in this Set
- Front
- Back
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Amortization |
The period of time over which a series of payments are made; also used as a synonym for depreciation. |
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Amortize |
To recover the principal value of long-term debt or the capital cost of a long-term asset. |
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As spent |
Money as it was valued at the time of expenditure as opposed to its present or future value. |
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Asset |
An item of value that is held by the business and recorded at the lower cost or market value. The sum of assets always equals the sum of liabilities (what is owed to others) plus equity (what owners have contributed to the business). |
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Asset management ratios |
See activity ratios. |
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Authority |
The delegated ability to do a job function and be held accountable for its responsibilities. Signing authority for expenditures is an example of authority delegated to an employee. |
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Average collection period |
An activity ratio. See days sales outstanding. |
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Bad debt |
A loan or receivable that cannot be collected at all or only at a steep discount. It can be treated as an expense as incurred, but some companies create an allowance for bad debt that is subtracted from gross revenue to calculate net revenue, along with allowances and returns and warranty work. |
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Balance sheet |
A financial statement documenting the assets that a business has at a point in time and where the money came from to acquire those assets. |
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Bankruptcy |
A legal status that is typically declared by a company or imposed by a court when a company fails to meet its obligation to pay liabilities.
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Barrier to entry |
The difficulty of a newcomer to enter a line of business, typically high for capital intense businesses and low for businesses such as distributors or retail outlets. |
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Billable hours |
The basic unit of sales for a business that provides services, such as a consultancy or a law firm. |
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Book breakeven |
The point at which operating income becomes positive, under the assumption that the interest on long-term debt is expensed before calculating operating income. |
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Bookkeeping |
The process of tracking (monetary) transactions in a business. |
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Budget |
A financial document that estimates the expected expenses and revenues for an upcoming interval, usually three months or a year. |
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Budgeting |
The process of developing a budget. |
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Business plan |
A projection of expected business operations, based primarily on sales revenue and operating expenses, often looking out five or 10 years. |
