FBLA

Fixed Costs

Production costs that remain the same no matter how much you produce, such as a building's rent.

Variable Costs

Production costs that vary with the amount of units produced, such as raw materials.

Living Expenses

Routine costs, such as food, utilities, and clothing, that vary from month to month.

Operating Expenses

Expenses a business incurs through normal operations, such as rent, equipment, inventory, marketing, wages, insurance, and R&D.

Cost of Goods Sold (COGS)

The costs and expenses directly related to the production of a company's goods, including raw materials, labor, and manufacturing overhead costs.

COGS Formula

COGS = Beginning Inventory + Purchases - Ending Inventory

Prime Cost

The direct costs of production, including raw materials and labor (excluding fixed costs).

Depreciation

The cost of owning an asset over its useful life, representing how much value has been lost through use.

Straight-Line Depreciation Formula

Yearly Depreciation = (Initial Asset Value - Salvage Value) / Useful Life in Years

Current Assets

Assets that can be sold/consumed within one year, including cash, accounts receivable, and inventory.

Current Liabilities

Short-term financial obligations due within a year, including accounts payable and short-term debt.

Current Ratio

Current Assets / Current Liabilities (measures short-term debt payment ability)

Net Worth

Assets - Liabilities (also called book value or shareholder's equity)

Gross Profit

Revenue - Cost of Goods Sold (profit after direct production costs)

Net Income

Revenue - All Expenses (including taxes, interest, and depreciation)

Gross Profit Margin

(Revenue - COGS) / Revenue (percentage of revenue remaining after production costs)

Accounts Payable

Short-term debts to vendors/suppliers for received goods/services.

Accounts Receivable

Amounts owed to a company for delivered goods/services not yet paid.

Purchase Order

Legally binding document specifying order details and payment terms.

Invoice

Document listing delivered products/services with payment terms.

Ordinary Annuity

Series of regular payments made at the END of each period.

Annuity Due

Series of regular payments made at the BEGINNING of each period.

Trustee

Entity that holds/manages property for a third party's benefit.

Tenant

Person who rents property under a lease agreement.

Parameter

Value describing a whole population (vs. statistic for samples).

Face Value

Amount paid to bondholder at maturity date (par value).

Treasury Discount

T-bills sold below face value; difference = interest earned.

Rule of 78

Interest calculation method favoring lenders in early loan periods.

31-day Months

January, March, May, July, August, October, December

30-day Months

April, June, September, November

28-day Month

February (29 in leap years)

Recent Leap Years

2016, 2020

Cash Discount

Discount for paying before scheduled due date.

Buy One Get One Free

Promotion requiring purchase of 1 item to receive another free.

Contractual Discounts

Pre-negotiated automatic discounts in contracts.

Early Payment Discount

Incentive discount for paying invoices early.

Free Shipping

Shipping cost waiver based on order date/conditions.

Order-Specific Discounts

Discounts applied to particular orders/items.

Price-Break Discounts

Volume-based immediate discounts at order placement.

Seasonal Discount

Off-season pricing to stimulate sales.

Trade Discount

Manufacturer-to-reseller price reduction.

Trade-In Credit

Credit for returning old product when buying new.

Volume Discount

Discount based on reaching sales volume thresholds.

Net Price

Final price after all discounts.

Markup

Retail Price - Cost (or percentage equivalent).

Markdown

Regular Price - Sale Price (or percentage equivalent).

Check Expiry

Banks honor checks for 6 months (1 year for US Treasury checks).

Check Components

12 elements: 1) Personal info 2) Payee 3) Dollar box 4) Written amount 5) Memo 6) Date 7) Signature 8) Bank info 9) Routing # 10) Account # 11) Check # 12) Fractional ABA

Floating a Check

Writing check with insufficient funds (check kiting).

Money Order

Prepaid payment certificate with no personal info.

Bank Draft

Bank-guaranteed payment drawn from bank's funds.

Bounced Check

Check rejected due to insufficient funds (NSF).

Traveler's Check

Prepaid fixed-amount checks for secure travel funds.

Cancelled Check

Check processed/cleared by bank.

Cashier's Check

Bank-issued check drawn from bank's funds.

Certified Check

Personal check guaranteed by bank with hold on funds.

Stop Payment Order

Request to cancel unprocessed check/payment.

Promissory Note

Written promise to pay specific amount by defined date.

Payor

Entity authorized to make payments from account.

Payee

Recipient of payment.

Blank Endorsement

Signature-only check endorsement (anyone can cash).

Restrictive Endorsement

"For deposit only" endorsement.

Special Endorsement

"Pay to order of [name]" endorsement.

Demand Deposit Account

Withdrawable-at-any-time bank account.

Bank Statement

Monthly transaction record for bank account.

Check Register

Record of check/cash transactions.

Reconciliation

Matching check register with bank statement.

Annuity (Insurance)

Insurance contract providing regular income stream.

Deductible

Out-of-pocket amount before insurance coverage starts.

Premium

Insurance policy cost.

Five Cs of Credit

Character, Capacity, Capital, Collateral, Conditions

Installment Price

(Monthly Payment × Number of Payments) + Down Payment

Installment Credit

Fixed-payment loans (e.g., mortgages, car loans).

Revolving Credit

Open-ended credit with rolling balance (e.g., credit cards).

Open Credit

Balances due in full monthly (e.g., charge cards).

Non-Revolving Credit

Fixed-limit credit that closes after payoff.

Secured Loans

Collateral-backed loans.

Unsecured Loans

Credit-based loans without collateral.

Average Daily Balance

(Σ Daily Balances) / Days in Cycle (for interest calculation)

APR

Annual interest rate (excluding compounding).

APY

Effective annual rate including compounding.

Net x Terms

Full payment required within x days.

x/y Terms

x% discount if paid within y days.

EOM

End of Month (payment terms start after month-end).

ROM

Receipt of Goods (payment timeline starts at delivery).

FOB

Free On Board shipping terms determining liability.

Balance Sheet

Assets = Liabilities + Equity (financial position snapshot).

Income Statement

Revenue - Expenses = Net Income (profit/loss report).

Cash Flow Statement

Operating/Investing/Financing cash movements.

Asset Account

Resources owned by business.

Expense Account

Costs incurred generating revenue.

Liability Account

Company debts/obligations.

Equity Account

Assets - Liabilities (owner's stake).

Debit

Left-side entry: Increases assets/expenses, decreases liabilities/equity.

Credit

Right-side entry: Increases liabilities/equity, decreases assets/expenses.

1 mm

0.03937 in

1 cm

0.3937 in

1 m

1.0936 yd

1 km

0.6214 mile

1 in

2.54 cm