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Accounting
33 guides in Finabase Learn
- Accounts payable Money a company owes its suppliers for goods and services it has received but not yet paid for; a current liability.
- Accounts receivable Money customers owe a company for sales already made on credit; a current asset on the balance sheet.
- Accrual accounting Recording revenue when it is earned and expenses when they are incurred, not when cash actually changes hands.
- Amortization Spreading the cost of an intangible asset, or the repayment of a loan, over a series of periods instead of all at once.
- Asset Anything a company or person owns that has economic value and is expected to provide a future benefit, from cash to factories.
- Auditor An independent accounting firm that examines a company's financial statements and gives an opinion on whether they are fairly stated.
- Balance sheet A snapshot of what a company owns, owes and the owners' stake at one date: assets equal liabilities plus shareholders' equity.
- Book value A company's total assets minus total liabilities as recorded on the balance sheet; the accounting value of shareholders' equity.
- Capital expenditure (capex) Cash a company spends on long-lived assets such as buildings, equipment and software, shown in investing cash flows.
- Cash flow The net amount of cash moving into and out of a business over a period, reported as operating, investing and financing flows.
- Cash flow statement The financial statement that reconciles net income to the actual change in cash through operating, investing and financing activities.
- Cost of Goods Sold (COGS) The direct costs of producing the goods or services a company sold in a period, subtracted from revenue to get gross profit.
- Current Assets Assets expected to be turned into cash or used up within one year, such as cash, receivables and inventory.
- Current Liabilities Obligations due within one year, such as accounts payable, short-term debt and accrued expenses.
- Depreciation Spreading the cost of a tangible asset such as equipment over its useful life as a yearly non-cash expense.
- EBIT Earnings before interest and taxes: profit from operations before financing costs and income tax.
- EBITDA Earnings before interest, taxes, depreciation and amortization; a rough, non-GAAP proxy for operating cash profit.
- Equity Ownership in a company: shares of stock, or on the balance sheet the assets left after subtracting liabilities.
- Fair value An estimate of what an asset is really worth based on its fundamentals, which may differ from its current market price.
- Fiscal year The 12-month period a company uses for its accounts, which may not match the calendar year; Apple's ends in late September.
- GAAP Generally Accepted Accounting Principles, the accounting standards US public companies must use in their financial statements.
- Goodwill An intangible asset recorded when a company buys another for more than the fair value of its net identifiable assets.
- Income statement The financial statement that reports revenue, expenses and profit over a period, ending in net income and EPS.
- Intangible asset A non-physical asset such as a patent, brand, software or goodwill that has value but no physical form.
- Inventory Goods a company holds for sale, plus raw materials and work in progress; a current asset on the balance sheet.
- Liabilities What a company owes to others, such as loans, bonds, payables and deferred revenue, shown on the balance sheet.
- Net income Revenue minus all expenses, interest and taxes for a period; the bottom line of the income statement.
- Non-GAAP earnings Profit figures a company reports that exclude some items GAAP requires, such as stock compensation; useful but easy to flatter.
- Operating cash flow Cash generated by a company's normal business operations, the first section of the cash flow statement.
- Retained earnings The running total of a company’s profits kept in the business rather than paid out as dividends, shown in shareholders’ equity.
- Revenue The money a company earns from selling its goods and services in a period, before any costs are subtracted; the income statement’s top line.
- Shareholders' equity What a company would have left for its owners after paying every liability: total assets minus total liabilities, as shown on the balance sheet.
- Working capital Current assets minus current liabilities: the short-term cushion a company has to pay its bills over the next year from assets it can turn into cash.
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