By Cindy Ravalo
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Expenses that are incurred by a business every month through operating the business.
What are operating expenses?
Financial statements based on projections.
What are pro forma financial statements?
The Accounting Equation.
What is, Assets = Owner’s Equity + Liabilities?
Revenue which shows up on an income statement but not on a cash flow statements.
What are accounts receivable?
A financial statement indicating how much money a business earns or loses during a particular period of time, including accounts receivables.
What is an income statement?
Items of value owned by a company.
What are assets?
Assets a company uses for many years. (Buildings, vehicles, equipment, etc…)
What are fixed assets?
The one-time only expenses that are paid to start a business.
What are start- up costs?
The lowering of a value of an assets to reflect its current net worth.
What is depreciation?
Assets that are cash or can be converted into cash, and are used up in normal business operations.
What are current assets?
Property that a borrower forfeits if he or she defaults on the loan.
What is colleteral?
A liability that is payable within a short period of time, such as a utility bill.
What is a current liability?
Accounts receivables a company believes it will not be able to collect.
What are uncollectable accounts?
A loan made for a specific purpose and payable within a year.
What is a short-term loan?
A loan payable for a period longer than a year.
What is a long term loan?
Risks caused by the actions of employees or customers.
What are human risks?
Risks caused by acts of nature.
What are natural risks?
Risks caused by business conditions.
What are economic risks?
When a check is written and the checking account on which the check drawn on has insufficient funds to cover the amount of the check.
What is a bounced check?
A risk that presents a chance for loss but no opportunity for gain.
What is a pure risk?
Insurance paid in the event that the policy holder dies.
What is life insurance?
Insurance which makes payments to workers who are injured on the job.
What is worker’s compensation?
Insurance that protects a business against lawsuits.
What is casualty insurance?
If the risk is a pure risk faced by a large number of people and the amount of loss can be predicted.
What is an insurable risk?
Insurance that insures all business property against normal risks, including, fire, robbery, and storm damage.
What is property insurance?
Money loaned to a business with the understanding that the money will be repaid, with interest, in certain time period.
What is debt capital?
Steps taken to protect you against certain types of risks.
What are security precautions?
Individuals or companies that make a living by investing in start- up companies.
Who are venture capitalists?
A customer’s act of knowingly taking items from a business without paying.
What is shop lifting?
Money loaned to a business for a share in the business’s profits.
What is equity capital?
Write the accounting equation and define each element in it:
The accounting equation is Assets = Liabilities + Owner’s Equity. Assets are items of value owned by the business. Liabilities are items that the business owes to others. Owner’s equity is the amount remaining after the value of all liabilities is subtracted from the value of all assets.