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Financial Management Terminologies

This document defines key financial management terminology used in accounting including profit and loss statements, balance sheets, assets, liabilities, equity, income, expenses, debtors, and creditors. A profit and loss statement shows income and spending over a period, while a balance sheet lists the value of all assets and liabilities at a point in time. Assets can be current, non-current, or physical. Liabilities are loans or expenses owed. Owner's equity represents the net worth of the business.

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Tessa Ariate
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206 views15 pages

Financial Management Terminologies

This document defines key financial management terminology used in accounting including profit and loss statements, balance sheets, assets, liabilities, equity, income, expenses, debtors, and creditors. A profit and loss statement shows income and spending over a period, while a balance sheet lists the value of all assets and liabilities at a point in time. Assets can be current, non-current, or physical. Liabilities are loans or expenses owed. Owner's equity represents the net worth of the business.

Uploaded by

Tessa Ariate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Financial Management

Terminologies
Profit and Loss (P&L) Statement

This is a report of your income and


expenditure for a specific period of time,
e.g. a month, a quarter, a year.
Balance Sheet

It is the total picture of a company’s worth at a


given point in time, e.g. June 30. It lists the
value of all assets and liabilities.
Income
Moneys received or expected to be received.
(i.e. invoice)
Expenditure

Moneys spent or bills received.


Assets

A physical asset is anything that a person or


business owns, e.g. car, furniture, building,
equipment.
Current Asset
Also known as “liquid asset”, are those that a
business could expect to realise in cash, sell or
consume during the current year, e.g. cash,
short-term investments.
Non-Current Asset

Also known as “non-liquid asset”, are long-


term assets such as property and equipment.
Owner’s Equity

The net worth of the business. All assets less


all liabilities equals net worth.
Liabilities

Loans or expenses that a person or company


has committed to and must pay for.
Capital

Money and property that a person or company


uses to transact business.
Reserves

Funds that have been set aside for special


purposes or to cover contingencies.
Debtors

People who owe you money.


Creditors

People you owe money to.


Depreciation
An amount which represents a decrease in
the value of an item over time due to wear
and tear - usually expressed as a percentage
amount each year.

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