Key financial terms | business.gov.au (2024)

FAQs

What are the financial terms of a business? ›

The basic financial terms include revenue, costs, profits and loss, the average rate of return, and break-even. Revenue is the total sales of a business's products or services, calculated by multiplying the price per unit by the number of units sold.

The principal is a business finance key term and is the original amount that is borrowed or the outstanding balance to be repaid less interest. It is used to calculate the total interest and fees charged.

Bankers are the individuals who have invaded earth from another planet. They come from the planet known as Financial World. They look and act exactly like the rest of us that inhabit earth with one exception, their language. The language they speak is known as Financial Jargon.

Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government.

For-profit businesses use four primary types of financial statement: the balance sheet, the income statement, the statement of cash flow, and the statement of retained earnings.

Key Takeaways

Finance encompasses banking, leverage or debt, credit, capital markets, money, investments, and the creation and oversight of financial systems. Basic financial concepts are based on microeconomic and macroeconomic theories.

Statement of financial position (balance sheet); Statement of income and expense (profit and loss account); Statement of cash flows (cash flow statement); Statement of changes in equity; and. Notes to the accounts.

Finance basics include developing, managing, and analysing funds and investments. It comprises projected cash flows to fund current projects via credit and debt, securities, and investments.

Money is a system of value that facilitates the exchange of goods in an economy. Using money allows buyers and sellers to pay less in transaction costs, compared to barter trading.

What is banking terminology? ›

Routing Number - This is a number that can identify your bank based on the geographical location of the institution. Bigger banks may have several routing numbers while smaller ones have only one. APR - Annual Percentage Rate (APR) is the yearly interest you earn by depositing your money your money into an account.

A transfer of assets (TOA) is when you transfer all or part of an account from one financial firm to another without selling your holdings.

Generally, the six functional areas of business management involve strategy, marketing, finance, human resources, technology and equipment, and operations.

Most financial management plans will break them down into four elements commonly recognised in financial management. These four elements are planning, controlling, organising & directing, and decision making.

Personal finance basics include budgeting, saving, investing, managing debt, and understanding credit. • Budgeting involves tracking income and expenses, setting financial goals, and making informed spending decisions. • Saving is important for emergencies, future goals, and retirement.

Financial statements are often audited by government agencies and accountants to ensure accuracy and for tax, financing, or investing purposes. For-profit primary financial statements include the balance sheet, income statement, statement of cash flow, and statement of changes in equity.

Loan terms refer to the terms and conditions involved when borrowing money. This can include the loan's repayment period, the interest rate and fees associated with the loan, penalty fees borrowers might be charged, and any other special conditions that may apply.

They are: (1) balance sheets; (2) income statements; (3) cash flow statements; and (4) statements of shareholders' equity. Balance sheets show what a company owns and what it owes at a fixed point in time. Income statements show how much money a company made and spent over a period of time.

The major elements of the financial statements (i.e., assets, liabilities, fund balance/net assets, revenues, expenditures, and expenses) are discussed below, including the proper accounting treatments and disclosure requirements.