ClassEssential Concepts of Business for Lawyers

These flashcards cover essential vocabulary and key concepts related to business and accounting principles that are important for lawyers.

Accounting

The discipline of counting and keeping track of money and things reducible to money.

Financial Statements

Reports that provide information about a company's financial performance and position.

Asset

An economic resource owned by a business that is expected to provide future benefits.

Liability

An obligation that a business owes to another entity, typically resulting from past transactions.

Equity

The residual interest in the assets of a business after deducting liabilities.

Balance Sheet

A financial statement that shows a company's financial position at a specific point in time, outlining assets, liabilities, and equity.

Income Statement

A financial statement that summarizes a company's revenues and expenses over a specific period, resulting in net income or loss.

Cash Flow Statement

A financial statement that collects and categorizes cash inflows and outflows across operating, investing, and financing activities.

Current Assets

Assets that are expected to be converted into cash or used up within one year.

Non-Current Assets

Assets that are not expected to be converted into cash or used up within one year.

Current Liabilities

Obligations that a business expects to settle within one year.

Non-Current Liabilities

Obligations that are due after one year.

Net Income

The profit of a company after all expenses and taxes have been deducted from revenues.

Earnings Per Share (EPS)

A measure of a company's profitability calculated by dividing net income by the number of outstanding shares.

Depreciation

The allocation of the cost of a tangible asset over its useful life.

Accrual Basis Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another, typically in a relationship of trust.

Market Value

The total value of a company's outstanding shares in the stock market.

Book Value

The value of a company's assets minus its liabilities, as recorded on the balance sheet.

Cash Flow from Operating Activities

Cash generated from the normal operations of a business, indicating how well it can generate cash to cover its operating expenses.