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Vocabulary flashcards for small business finance and accounting concepts.
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Debt Finance
Funding obtained through loans, overdrafts, or lines of credit.
Trade Credit
Supplier credit arrangements allowing businesses to buy now and pay later.
Government Grants and Subsidies
Financial aid available for small businesses, especially for innovation or employing apprentices.
Leasing and Hire Purchase
Financing options for equipment or vehicles, preserving working capital.
Invoice Financing
Selling unpaid invoices to a third party to access cash quickly.
Crowdfunding (Debt-based)
Raising money via online platforms in exchange for repayment with interest.
Microfinance
Small loans typically from community or not-for-profit lenders.
Collateral
Assets pledged as security for a loan.
Liquidity
The ability of a business to meet its short-term obligations.
Guarantors
Individuals who promise to repay a loan if the borrower defaults.
Sole Trader
A business owned and controlled by one person who is fully liable for its debts.
Partnership
A business owned and controlled by two or more people who share in its profits or losses.
Proprietary Company (Pty Ltd)
A separate legal entity owned by shareholders, offering limited liability.
Manufacturing
A type of business that produces goods from raw materials, is capital-intensive, and requires machinery, labor, and production space.
Trading/Retailing
A type of business that buys and resells products, focuses on inventory management and sales, and includes wholesalers and retailers.
Service Providing
A type of business that offers intangible products, is labor-intensive, and for which customer experience is crucial.
Accounting Equation
Assets = Liabilities + Owner’s Equity; the foundation of financial accounting.
Double Entry Accounting
Each transaction affects at least two accounts, ensuring the accounting equation remains balanced.
Perpetual Inventory System
An inventory system where records are updated continuously, and COGS is recorded at the time of sale.
GST (Goods and Services Tax)
A 10% value-added tax on most goods and services sold or consumed in Australia.
Accrual Basis
Revenues and expenses recorded when earned/incurred, not when cash is exchanged.
Going Concern
Assumes the business will continue to operate in the foreseeable future.
Accounting Entity
The principle that a business is separate from its owner.
Monetary Unit Assumption
All transactions are measured and reported in monetary terms (e.g., AUD).
Historical Cost
Assets are recorded at their original cost.
Materiality
Only information that would influence decisions is included in financial reports.
Accounting Period
The life of a business is divided into regular periods (e.g., monthly, yearly) for reporting.
Bad Debts
The risk of non-payment by customers, impacting cash flow and profits.
Balance Sheet
A financial statement showing the financial position of a business at a specific point in time; it provides figures necessary to calculate the liquidity of the business.
Income Statement
A financial statement showing the performance of a business (profit or loss) over a period of time.
Net sales
= sales – sales returns – discount allowed
Total cost of sales =
cost of sales + import duties + cartage/freight inwards – discount received