30 Basic Financial Terms


Introduction to 30 Basic Financial Terms

  1. Asset Management: Management of or part of a client’s portfolio which are financial assets such as stocks, bonds, commodities, currencies, mutual funds, exchange traded funds and closed funds. Markets, OTC, Regions, Equity Indices, IPOs, Loans, Credit products.
  2. Financial statements: Income statement-revenue and profit, balance sheet-total financial situation. Cash flow statements-cash in and out.
  3. OTC: Over the counter. Two people agreed to enter into an agreement without being securitized or standardized.
  4. IPOs: Initial public offering.
  5. Financial Activities: This section summarizes cash transactions that involves raising, borrowing and repaying capital.
  6. Balance sheet : Assets, liabilities, Net worth of a company
  7. Assets: This is the ownership of value that can be converted to cash. It is also something that a company owns and controls. Fixed asset, cash, inventory, Account receivable, property, equipment’s and buildings. Assets equals total Equity plus total liability.
  8. Liability is anything that the company owed. Bank loans, mortgage and accounts payable. Taxes
  9. Shareholder’s equity: Retained earnings, common shares, dividends.
  10. Income statement: Profitability, Revenues, expenses, Net profits of a company. A financial report used to track your revenues and expenses over a period of time.
  11. Revenue is anything earned.
  12. Discount
  13. Price: Cost price and selling price
  14. Sale: Buying and selling activity
  15. Transaction: A process through which buying and selling of products takes place.
  16. Profit/loss
  17. Gross
  18. Currency: Major currencies recognized by the world. USD, Pounds, Euro, Yen, AUD, CAD.
  19. Expenses is the cost of running a business activity. Utility expenses, salary expenses, rent expense.
  20. Equity is a residual value of an entity’s asset after deducting all it’s liabilities.
  21. Equity is the net asset of a business. Equity represents the net funds invested into a business by its owners. Equity is the residual amount that would be left if the company sold all its assets and paid off all its liabilities. First part of equity is capital contributions. Initial money contributed to the business from the beginning. Capital contributions is the money the owners contributed to the business out of their own pockets. Capital contributions plus retained earnings. Equity equals total asset-total liabilities.
  22. Entity type: Sole proprietorship-Owner’s equity, partnership-Partner contributions and corporations-Shareholders equity.
  23. Retained earnings: Accumulated profit held for future use.
  24. Balance sheet: Comprises of asset, liabilities and equity. Accountants use balance sheet to visualize accounting transactions. Balance sheet is the foundation for any accounting system.
  25. Working capital
  26. Budgeting
  27. Savings
  28. Personal Finance
  29. Financial planning
  30. Investments

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