August 29


100 Key Accounting and Finance Terms for Business Owners and Entrepreneurs

By Joel Gilhang

August 29, 2023

It pays to be in the know, and we know that when our clients have access to the right information, it is easier to make the best decisions. Here are some common terms we’ve compiled for your reference. Of course, if you want to dive deeper, going deep is what we do. Call one of our experts at DASG today.

  1. 10-K: A comprehensive annual report filed by public companies.
  2. 401(k): A retirement savings plan sponsored by an employer.
  3. 52-Week High/Low: The highest and lowest stock prices over the past year.
  4. Accounts Payable: Money owed by a business to suppliers or vendors.
  5. Accounts Receivable: Money owed to a business by customers for goods or services.
  6. Accrual: Revenue or expenses that are recognized before cash is exchanged.
  7. Accrued Interest: Interest that has been earned but not yet paid.
  8. Amortization: The gradual reduction of a debt over a specific period.
  9. Angel Investor: An individual who provides capital to a startup in exchange for ownership.
  10. Annuity: A fixed sum of money paid to someone each year.
  11. Arbitrage: Buying and selling assets simultaneously to profit from price differences.
  12. Assets: Everything a company owns that has monetary value.
  13. Audit: An official inspection of an organization’s accounts.
  14. Balance Sheet: A financial statement showing a company’s assets, liabilities, and equity.
  15. Bankruptcy: Legal process for liquidating a business (or personal) assets to pay off debt.
  16. Bear Market: A market where stock prices are falling.
  17. Bond: A debt security that pays interest over a fixed period.
  18. Budget: An estimate of income and expenditure for a set period.
  19. Bull Market: A market where stock prices are rising.
  20. Capital: Money invested in a business to generate income.
  21. Capital Expenditure (CapEx): Money spent to acquire or upgrade assets.
  22. Cash Flow: The movement of money in and out of a business.
  23. Cash Flow Statement: A financial statement showing how balance sheet account changes affect cash.
  24. Capital Gain: Profit from the sale of an investment or property.
  25. Capital Loss: A loss incurred when selling an investment for less than the purchase price.
  26. Cash Equivalents: Short-term, highly liquid investments.
  27. Chapter 11: A form of bankruptcy that allows a business to reorganize.
  28. Collateral: Assets pledged to secure a loan.
  29. Common Stock: Shares that represent ownership in a corporation.
  30. Compound Interest: Interest calculated on both the initial principal and accumulated interest.
  31. Convertible Bond: A bond that can be converted into stock.
  32. Cost-Benefit Analysis: Evaluating the pros and cons of an investment.
  33. Cost of Goods Sold (COGS): The cost to produce the goods or services sold by a company.
  34. Credit: The ability of a customer to obtain goods before payment.
  35. Credit Score: A numerical representation of a person’s creditworthiness.
  36. Credit Rating: An assessment of the creditworthiness of a borrower.
  37. Day Trading: Buying and selling financial instruments within the same trading day.
  38. Debt: Money borrowed that needs to be repaid.
  39. Debt-to-Equity Ratio: A measure of a company’s financial leverage.
  40. Deferred Tax: A tax liability that is payable in the future.
  41. Depreciation: The reduction in value of an asset over time.
  42. Diversification: Spreading investments across various assets to reduce risk.
  43. Depreciation: The reduction in value of an asset over time.
  44. Dividend: A share of profits paid to shareholders.
  45. Dividend Yield: The annual dividend per share divided by the stock’s price.
  46. Due Date: The date by which a payment must be made.
  47. Due Diligence: The process of evaluating a business opportunity thoroughly.
  48. Earnings Before Interest and Taxes (EBIT): A measure of a company’s profitability.
  49. Earnings Per Share (EPS): The portion of a company’s profit allocated to each share of stock.
  50. Economic Indicator: A statistic that indicates the direction of an economy.
  51. Equity: Ownership interest in a corporation in the form of stock.
  52. Equity Financing: Raising capital through the sale of shares.
  53. Exchange Rate: The value of one currency in terms of another.
  54. Equity: Ownership interest in a corporation in the form of stock.
  55. Expense: Money spent or incurred in an organization’s efforts to generate revenue.
  56. Financial Statement: Reports that summarize the financial performance of a business.
  57. Fixed Costs: Costs that do not change with the level of production or sales.
  58. Fiscal Year: A 12-month period used for accounting purposes.
  59. Gross Margin: Revenue minus the cost of goods sold.
  60. Gross Profit: Revenue minus the cost of goods sold, before expenses.
  61. Hedge Fund: An investment fund that uses various strategies to earn returns.
  62. Income Statement: A financial report showing revenue, expenses, and profits over a period.
  63. Initial Public Offering (IPO): The first stock sale by a company to the public.
  64. Interest: The cost of borrowing money.
  65. Inventory: Goods available for sale.
  66. Investment: Money spent with the expectation of achieving a profit.
  67. Liabilities: Debts or obligations that a company owes.
  68. Liquidity: The ease with which an asset can be converted into cash.
  69. Loan: Money borrowed that is expected to be paid back with interest.
  70. Margin: The difference between the cost of producing a product and its selling price.
  71. Market Capitalization: The total value of a company’s outstanding shares of stock.
  72. Merger: The combination of two companies into one.
  73. Net Income: Total revenue minus total expenses.
  74. Net Worth: The value of all assets minus all liabilities.
  75. Operating Costs: Expenses related to the day-to-day functioning of a business.
  76. Overhead: Fixed costs that are not directly related to production.
  77. Partnership: A business owned by two or more people.
  78. Payroll: The total amount of wages paid to employees.
  79. P/E Ratio: Price-to-earnings ratio used to value a company’s stock.
  80. Portfolio: A collection of financial investments.
  81. Profit: Revenue minus expenses.
  82. Profit Margin: Net income divided by revenue.
  83. Quick Ratio: A measure of a company’s ability to cover its short-term liabilities.
  84. Recession: A period of economic decline lasting at least two quarters.
  85. Revenue: Money earned by a business.
  86. Return on Investment (ROI): The profit or loss from an investment relative to its cost.
  87. Risk: The potential for financial loss.
  88. Securities: Financial instruments like stocks and bonds.
  89. Shareholder: An owner of shares in a company.
  90. Solvency: A company’s ability to meet its long-term debts.
  91. Startup: A new business in the early stages of development.
  92. Tax Deduction: An expense that can be subtracted from taxable income.
  93. Tax Liability: The amount of tax owed to the government.
  94. Treasury Bond: A government debt security with over 10 years of maturity.
  95. Variable Costs: Costs that change with the level of production or sales.
  96. Venture Capital: Funding provided to startups and small businesses with high growth potential.
  97. Working Capital: Current assets minus current liabilities.
  98. Write-off: Reducing the value of an asset for tax purposes.
  99. Yield: The income return on an investment.
  100. Z-Score: A statistical measure used to predict a company’s likelihood of bankruptcy.

Joel Gilhang

About the author

Joel brings over 30 years of experience in securities, financial planning, and tax preparation to his work. With a background in both accounting and financial advising, he offers clients a unique perspective on asset management and tax planning for businesses and independent contractors. Joel is a licensed Investment Advisor Representative and Registered Representative.

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