What is a 403(B)? What is financial modeling? Like any industry, finance is awash with jargon. In a financial accounting class, and on the job as an accountant, you need to know some jargon. 1. This article is an attempt to create a glossary of financial terms, which is both compact as well as comprehensive. Balance sheet (BS) definition: A financial report that summarizes a company's assets (what it owns), liabilities (what it owes) and owner or shareholder equity, at a given time. Hedge Funds: A hedge fund is a type of investment partnership. Critics will say it is a deliberate ploy by advisers to part you with your money by selling complex financial investments that … Chart of accounts: A list of all accounts set up to handle a company’s accounting transactions. Schedule A Call, Contact our Self-Directed Experts. Generally accepted accounting principles (GAAP): The rules financial accountants have to follow when handling accounting transactions and preparing financial statements. or If you don't understand the terminology, you might not have a full grasp of the process. Accounts payable is a business finance 101 term. This financial glossary gives better, more precise, and simple-to-understand meanings of financial terminology. Certified Public Accountant (CPA): The professional license for accountants. Financial leverage is measured by the ratio of debt to debt plus equity. Here is a list of some basic investing terms you should know, along with their definition: ASK The lowest price a seller is willing to accept when selling a security (stock). Everything starts from knowledge, especially in the financial industry. Consistent: The company uses the same accounting treatment for the same types of accounting transactions. Amortization. While lecturing on certain topics, I would occasionally observe puzzled faces upon mentioning some basic financial terms. This page or article may contain affiliate links. These are generally broken down into six different types of assets. People need to understand their rights and boundaries before they jump into financial endeavors. While managing your finances, you may come across terms you don't understand. For example, an employee receiving a raise may reply with the words "cool beans," upon receiving the news. When you file for it, it stays on your record for 10 years-- and all of your assets are seized. You then must take and pass the Uniform Certified Public Accountant exam, which is written and scored by the AICPA. Fixed interest Interest paid on investments such as bonds and debentures, paid at a predetermined and unchanging rate for a specified period. Business combinations come in two different forms: Asset acquisition: One company acquires the net assets of another company. In today’s world, people need to know a lot more about finances than they needed to know two hundred years ago. Financial accounting uses three methods of depreciation based on time: the straight-line, declining balance, and sum-of-the-years’-digits methods. Financial terminology can sometimes seem like a race to use the most syllables to describe one concept. Our customers appreciate our personal service and welcome the relief and peace of mind we afford to them as they take steps to assure the financial growth and safety of their retirement accounts. Business and Finance Terms to Know. Asset: Something that has the potential to earn money for you. Contingency: A liability that exists because of a circumstance (such as a lawsuit) that may cause a business loss in the future depending on other events that have yet to happen (such as the outcome of a trial) and indeed may never happen. The amount is set out in the company's memorandum of association. Current assets. Schedule A Call This is a report and opinion, by an independent person or firm, on an organisation's financial records. Financial statements include … Capital (CAP) Capital (CAP) definition: A financial asset or the value of a financial asset, such as cash or goods. General ledger: The record of all financial transactions taking place within a business during a particular accounting cycle, ordered by chart of account number. Financial Accounting For Dummies provides students who are studying finance, accounting and business with the basic concepts, terminology, and methods to interpret, analyse, prepare and evaluate financial statements. (800) 395-5200 or Schedule A Call, Contact our Self-Directed Experts. FINANCIAL STATEMENT comprising the accounts of two or more entities. This represents your small business’s obligations to pay debts owed to lenders, suppliers, and creditors. In a broad sense, assets include everything your company owns that has some economic value. Everybody should start with introducing themselves to key terminology relevant to checking, savings, borrowing, building credit, and investing. Even those people rely on mainstream society to purchase property, food, and services at a bare minimum. This A-Z Pocket Guide to Understanding Financial Terms is just one of the achievements of EBS’s partnership with NALA. Financial Terminology every investor must know! Many of these key areas cover aspects that increase the chances of gaining financial security to pay for bills now, in the short-term, long-term, and after retirement. Comparable: The quality of the information is such that users can identity differences and similarities between companies they are evaluating. Financial Accounting For Dummies Maire Loughran Your plain-English guide to navigating a financial accounting courseDespite the economic landscape and job market, demand for accountants remains strong, and accountants will continue to see high demand for their services as the economy rebounds and businesses grow. A fourth method, units-of-production, is based on actual physical usage of the fixed asset. To become a CPA, you must first complete a certain number of accounting and business-related courses in college. Financial institutions have broadened their horizons in offering more borrowing and investment opportunities for eligible individuals and their families. Follow the list of financial terms below to gain a better understanding of these concepts to help secure your financial future. Sometimes financial experts engaging in accounting or bookkeeping work use unfamiliar terms to explain and describe transactions such as loans or investments. For example, GAAP determine how to expense assets, record revenue, and value inventory. Authorised share capital This is the highest amount of share capital that a company can issue. Whether buying or selling, price is only a part of the actual total cost. Financial statements are written records that convey the business activities and the financial performance of a company. With easy-to-understand explanations and real-life examples, Financial Accounting For Dummies provides you with the basic concepts, terminology, and methods to interpret, analyze, and evaluate business financial statements. $21.99 US / $25.99 CN / £16.99 UK ISBN 978-0-470-50693-6 Business & Economics/Personal Finance/General Go to Dummies.com® for videos, step-by-step photos, how-to articles, or to shop! 7. Introduction to Mortgages: Basic Mortgage Terminology Definitions of Common Mortgage Terms . Annual fee A charge made once a year for a financial service such as a Credit card or charge card. Expense ratio. As with technology, the finance world is filled with acronyms and terms that might sound alien to many people. The Basics of Financial Markets; Contact our Self-Directed Experts. Financial modeling is one of the most highly valued, but thinly understood, skills in financial analysis. By Maire Loughran . Reliable: You can depend on the information to steer you in the right direction. Your plain–English guide to financial accounting for students and trainees. We take the complex process of financial investment and put it into a clear and concise roadmap. Annual percentage rate (APR) The total cost of a loan expressed as a percentage for one year, including interest and any charges Automated Teller Machine (ATM) A machine which allows you to withdraw money and make other transactions. Accounts Payable. While many educational institutions offer advanced courses in finance, most people can teach themselves the basics to get started. American Institute of Certified Public Accountants (AICPA): The national professional organization for all certified public accountants (CPAs). Just about everything you learn and do in a financial accounting class harkens back to the way GAAP tell accountants how to do their job. Depreciation: The method used to systematically move the cost of an asset from the balance sheet to the income statement over the course of the asset’s useful life. It is something you own that can reasonably be expected to produce something for you.Assets include stocks, bonds, commodities, real estate, and other investments. Downloadable diagram of actual total cost. Leave a Message. A. Following is a glossary of words and phrases crucial to the accounting profession. Then it is important that you learn and understand some basic investment terminology. 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