| A | B |
|---|
| Budget | ”A financial plan usually extending for a period of one year that is used to manage cash flow out of a business. A budget would take into account how much income the business expects to receive |
| Start-up Cost | ”A variety of different costs that a new business owner must incur in order to get the business established. Typically these are one-time costs |
| Component Percentages | ”The percentage relationships between one financial statement item and the total that includes that item. For example |
| Gross Income | ”The total amount of income earned from sales and investment returns before taxes and other business expenses are deducted.” |
| Gross Profit | ”The profit of a business before taxes |
| Income | ”Money or revenue coming into a business from sales or investments.” |
| Income Statement | ”The financial statement that shows a firm’s profit after costs |
| Net Income | ”Revenue left over after all costs and expenses |
| Net Profit | ”Also referred to as the bottom line |
| Profit | ”The money earned from conducting business after all costs and expenses have been paid. Profit is the key incentive for operating a business.” |
| Balance Sheet | ”A financial snapshot of a business |
| Debt | ”An amount owed.” |
| Net Worth | ”For a company |
| Owner’s Equity | ”The amount of the business that belongs to the owners minus any liabilities owed by the business.” |
| Debt | ”An amount owed.” |
| Net Worth | ”For a company |
| Owner’s Equity | ”The amount of the business that belongs to the owners minus any liabilities owed by the business.” |
| Cash Controls | ” A company must have adequate controls to prevent theft or other misuses of cash. These control activities include segregation of duties |
| Cash Flow | ” The difference between cash coming in and cash going out of a business.” |
| Cash Flow Statement | ”Reports the cash going out of a business to pay for a variety of expenses as well as the cash coming into the business from sales revenues and investment returns.” |
| Improving Cash Flow | ”It's a simple enough formula: collect your receivables as fast as possible and slow down your payables without jeopardizing your relationship with suppliers.” |
