Finance and Accounting Terminology

A collection of flashcards focused on key financial and accounting terms relevant to business studies.

Entrepreneur

An individual who starts and manages a business, taking on financial risks in the hope of profit.

Internal Sources of Finance

Funds available within the business without the need for borrowing, including owners’ funds, retained profits, selling assets, and trade credit.

External Sources of Finance

Funds obtained from outside the business, such as bank loans, mortgages, new shares, private loans, overdrafts, hire purchases, and government grants.

Cash Flow

The movement of money in and out of a business, consisting of inflow and outflows.

Profit

The amount of money remaining after all expenses have been deducted from revenue.

Revenue

The total amount of money a business makes from selling products or services.

Fixed Costs

Costs that remain constant regardless of the level of goods or services produced by the business.

Variable Costs

Costs that change based on the level of production or sales.

Net Profit

The final profit after all expenses, including taxes and interest, have been deducted.

Asset

Something of value that a business owns or controls, such as cash, stock, or buildings.

Liability

An obligation or debt that a business owes to others, including taxes, loans, and unpaid bills.

Income Statement

A financial statement that summarizes revenues and expenses to show profit or loss over a period.

Statement of Financial Position

Also known as the balance sheet, it provides a snapshot of a company's assets, liabilities, and equity at a specific point in time.

Gross Profit

The profit a business makes after subtracting the costs associated with making and selling its products.

Operating Profit

Profit calculated by deducting overheads from gross profit.

Investment

Money put into a business with the expectation to generate returns or profit.

Government Grants

Funds provided by the government that do not need to be repaid, typically under strict conditions.

ARR (Average Rate of Return)

The percentage return expected from an investment based on its gains.

Overheads

The ongoing expenses of operating a business that are not directly tied to making a product.