As with technology, the finance world is filled with acronyms and terms that might sound alien to many people. The nysscpa has prepared a glossary of accounting terms for accountants and journalists who report on. No matter what business you go into youre likely to hear these terms. Understanding the financial condition of the business and the accounting principles used to determine the financial condition is critical for business owners. This az pocket guide to understanding financial terms is just one of the achievements of ebss partnership with nala. Accountants use terminology foreign to many outside of this profession.
Basic financial planning medical protection savings invest 3. Basic accounting concepts and financial statements the basic principles of accounting are best understood by considering some simple businesses and how they might document their financial activities. For example, sincerity, loyality, honesty of employees are not. The text in this chapter is intended to clarify business related concepts. Accounting provides financial information about a business organisation. The worldview of accounting and accountants may certainly involve some unhelpful characters poring over formidable figures stacked up in indecipherable columns. We have tried to explain these basic financial terms from a personal viewpoint as well as clarified their significance in business.
Introduction to accounting basics this explanation of accounting basics will introduce you to some basic accounting principles, accounting concepts, and accounting terminology. Leasing is an agreement between businesses detailing that the lessor allows the lessee the use of an asset for a certain period of time, in return of a payment or series of payments. Regardless of whether you sell a product or service, operate locally or nationally or sell to consumers or other businesses, many basic financial practices remain the same. Basic accounting concepts n matching n revenues and expenses shown on the income statement must be matched for the period. In simple words they act as a broker or consultant when companies need to raise capital, are considering to merge or buy another company or want to.
Understanding the terminology will help you understand the concepts and their relevance to you, and more importantly, they will help you analyze and run your small business. A laymans guide to financial terms utsc university of toronto. Finance is the study of money management and the process of acquiring needed funds. When one company takes over another and clearly established itself as the new owner, the purchase is called an acquisition. Basic financial concepts and pinkerton essay example. The concept of forward price applies to almost any asset e. During both slow and boom times, its important to maintain consisting accounting practices. The basics of banking will introduce participants to basic banking concepts, such as types of financial institutions banks, credit unions, and savings institutions, the different accounts they can open to help save money, use money to pay for daytoday expenses, or even save for longterm goals.
Understanding the basic concept about the financial management becomes an essential. Key concepts of financial management your business. Also, we assumed there were only two financing options available for cpp. Based upon wackenhut and the current market value of debt and equity of pinkerton, we estimated the cost of capital of pinkerton to be 14. Financial terminology can sometimes seem like a race to use the most syllables to describe one concept. In the first lecture of this course, the instructors introduce key terms and concepts related to financial products, markets, and quantitative analysis. Basic financial planning concepts linkedin slideshare. Glossary of terms used in financial management flashcards. The a to z of financial terms plain english campaign. Glossary of important business, economic, and financial history terms. Mergers and acquisition has been a very popular vehicle for growth and restructuring in the corporate world during the last couple of decades. Introduction, financial terms and concepts posted by peter baskerville on monday, may 4th 2015 mit 18. Basic investment terms annuity a financial product sold by financial institutions pay out a stream of payments to the individual at a later point. Some people may receive a reduced basic state pension because they have not.
Corporate finance understanding the concept and principles. It is not intended nor can it replace formal legal advice. Longterm financial requirements or fixed capital requirement. Go through the glossary of financial terms and know the meaning of all financial terms through their definitions here at the economic times. Mergers and acquisitions edinburgh business school. But the transactions which cannot be expressed in monetary terms are not recorded in the books of accounts.
In a pooling of interests, two entities merge through an exchange of. Once you become familiar with some of these terms and concepts, you will feel comfortable navigating through the explanations, quizzes, puzzles. Basic financial statement, usually accompanied by appropriate. Not getting too much into the technical language, we have explained the important basic financial terms and concepts or accounting terms in a simple manner. Foreword adult basic education, the organisations are working together to help tackle financial literacy and to address the issue of access to financial products and services for those with literacy and numeracy difficulties. Hey guys i am currently a finance major but i wont get any classroom exposure to general finance until spring semester am looking to expand my knowledge in finance as far as terminology and concepts go so i can better prepare for technical interviews when the. However, a short and sweet description of accounting does exist. A bank account specifically set up by a business owner to float money through from business a to enhance the perceived value of business b. Before we start, we need to have an appropriate vocabulary of nancial terms.
Choose your answers to the questions and click next to see the next set of questions. Test on basic theory concepts of financial management checks the extent of clarity you have on the basics of financial management. Corporate finance in investment banks is different from departments like sales or trading, as they are not trading or making markets but rather they help companies with certain financial situations. Additional resources that you can use to enhance your knowledge free investment banking courses this free course is a must for someone who is new to ib. Watch this short video to quickly understand the main concepts covered in this guide.
This is a term youre most likely to hear in the financial sector. Its a tiny little book, written in an uncomplicated style. S096 topics in mathematics with applications in finance, fall 20 view the complete course. Accounting basics important disclaimer important note. Days creditors outstanding this is a means of checking how a business is paying its creditors as compared to negotiated payment terms. When a finished good is produced from the raw material there are certain process and costs which are involved like labor cost.
The most important is that the financial statements known as the final accounts must be drafted in the same way. Assets resources with economic value owned by a company, fund, or individual. The company repaid 400 eur shortterm loan and 20 eur interest. Personal finance, corporate finance, and public finance all fall under the umbrella of this broad term. Important basic financial terms every newbie must know. They are several assumptions concerned with the recording of transactions in the books. It first came into existence in 2000 following the merger of amsterdam. In its most basic definition, net income refers to a companys total earnings or profit. The basics of the strategic planning course are extended to encompass focus and. Financial management cash float accounts definition. Basic concepts of merger and acquisitions finance essay. It could be a person, like a customer, or a business, like a. For a basic introduction to sound financial concepts, you cant do much better than the richest man in babylon. Understanding the meaning behind basic accounting terms opens the communication between accountants and business.
The chance that the value of a financial investment will be different than expected. Financial manager top level professional who may have final responsibility for aspects of a business financial activity accountant professional who produces and examines financial records, prepares financial reports and tax returns. Bbaassiicc ccoonncceeppttss ooff ffiinnaanncciiaall aaccccoouunnttiinngg by. It is based on the belief that our customers needs are of the utmost importance and our team is committed to meeting those needs. This accounting terminology checklist outlines the terminology, concepts and conventions that are accepted within the accounting profession.
Before taking any actions relating to your business, always consult your accountant or a business lawtax attorney. Introduction, financial terms and concepts youtube. Concept which directs the least favorable effect on net income. Basic banking concepts free download as powerpoint presentation.
A debtor, as the term suggests, is someone who is in debt to you. Money invested today is worth more than money invested at any point in the future. This free course starts from excel, then moves to teach accounting concepts, valuations concepts and finally, financial modeling concepts. Accounting concepts, principles and basic terms mba. Terms like revenue, expenses, gross profit, depreciation, bad debt, and fixed assets have precise definitions when used in business accounting. Basic financial terms accounting concepts for newbies. Basic energy said its board has approved an equity investment of 12. Basic theory concepts of financial management online.
Itll explain the definition of finance, provide examples of finance, and cover. Audience this tutorial has been designed to help beginners pursuing education in financial accounting or business management. This is a way of paying for things, without using money, by exchanging goods. We have written this a to z guide to help you to understand some of the terms you will come across when you. The life of a business unit is indefinite as per the going concern concept. Accounting terminology guide over 1,000 accounting and. Describe the role of the various financial institutions and markets. Thats because it has more time to grow and compound. Our firm holds exceptionally high standards and a commitment to partnering with our clients. List and discuss basic forms of business organizations.
From a legal point of view, the target company ceases to exist, the buyer swallows the business and the buyers stock continues to be traded. By far the most important financial concept, describes how important the value of time is in building wealth. Simply put, net income is the difference calculated when subtracting all expenses including. The basic financial concepts free financial advice and. Demonstrate and calculate the depreciation methods. In accounting, everything is recorded in terms of money. Financial accounting i about the tutorial this tutorial will help you understand the basics of financial accounting and its associated terminologies. Financialmanagement terms small business encyclopedia. You can skip questions if you would like and come back to them. The basic accounting equation financial accounting is based upon the accounting equation. The most important financial terms everyone should know. You need to understand exactly what is meant by accounting terms like these. Financial terms and definitions page 3 the economic times. These basic concepts come handy not just after the 10th grade, but at all stages from graduation to post graduation and other entrance and finance related exams like company secretary, chartered financial analyst.