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Revenue:
All income that business receives over a period of time.
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Expenses:
Are the costs of operating business.
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Profit:
If a business makes more than it looses
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Loss:
If a Business spends more than it makes.
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Basic financial equations:
- Revenue-expenses=Profit or loss
- Revenue>Expenses=Profit
- Revenue<Expenses=Loss
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Budget:
Provides detailed plans for the financial needs of individuals, business, or families
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Start-up Budget
Plans income and expenses for the beginning of a new business
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Operating Budget
Describes the financial plan for ongoing operations of the business of specific needs
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Cash Budget
Is an estimate of the actual money recived and paid out for a specific period.
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Financial records
Are used to record and analyze the financial performance of a business.
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Assets
What a company owns
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Liabilities
Are what a company owns
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Owners equity
is the value of a owners investment in the business
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Balance sheet
Asset, liabilities, and equity of a owner at a certain date
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Income statement
Revenue, income, and net income or loss of a business at a certain date
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Payroll
Is the finiancial record of an employee compensation, deductions and net pay
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Payroll system
Maintains personal records for each individual employee
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Payroll records
is the documentation used to process earnings payments and records for each employee
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Direct deposit
When an employee has their income electronically put into thier bank account
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Financial performance ratio
comparisons of a companies financial elements
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Descrpanies
are differences between actual and budgeted performance
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Net income ratio
Shows how much income is being produced by each dollar sold.
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Current ratio
Current assests compared to the current liablities
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Debt to equity ratio
The companys liablites divided by the owners equaty
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Return on equity ratio
The net profit of the business compared to the amount of owners equity.
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