Higher business finance words and definitions

non-current asset

something the business owns and uses on a daily basis

current asset

it shows the cash or near-cash a business has

current liabilities

debts that are paid back within the year

non-current liabilities

debts that are not due to be repaid for more than 12 months

working equity

money that a business can access immediately (money that is not tied up in property or investments)

net assets employed

the difference in value between the total assets and the total current liabilities

reserves

money and profits that are retained in the business

net assets

the financial value or worth of the business after all debts are taken care of

revenue

the amount of money from selling goods or services

cost of sales

the cost of purchasing goods from a supplier

purchase returns

the value of products purchased but then returned to the supplier

gross profit

the profit made from buying and selling (the cost of inventory is taken away from the revenue)

expenses (income statements)

the running costs throughout the year e.g. wages

profit for the year

the profit made after expenses are deducted from gross profit

opening balance

money that the business has at the start of the time period e.g. month

closing balance

total income minus total expenses for the period

add income

both the sales and receipts from trade receivables are recorded as well as any other cash income

expenses (cash budgets)

all cash expenses

total expenses

estimated total amount that will be spent during the month

total funds for the period

total amount of cash available to the business each month during the budgeted time period