1. Expenses (Fixed, Variable, Accrued, Operation) – FE, VE, AE, OE
Definition: The fixed, variable, accrued or day-to-day costs that a business may incur through its operations. Examples of expenses include payments to banks, suppliers, employees or equipment.
2. Generally Accepted Accounting Principles – GAAP
Definition: A set of rules and guidelines developed by the accounting industry for companies to follow when reporting financial data. Following these rules is especially critical for all publicly traded companies.
3. General Ledger – GL
Definition: A complete record of the financial transactions over the life of a company.
4. Liabilities (Current and Long-Term) – CL and LTL
Definition: A company's debts or financial obligations it incurred during business operations. Current liabilities are those debts that are payable within a year, such as a debt to suppliers. Long-term liabilities are typically payable over a period of time greater than one year. An example of a long-term liability would be a bank loan.
5. Net Income – NI
Definition: A company's total earnings, also called net profit or the “bottom line.” Net income is calculated by subtracting totally expenses from total revenues.
6. Owner's Equity – OE
Definition: An owner’s equity is typically explained in terms of the percentage amount of stock a person has ownership interest in the company. The owners of the stock are commonly referred to as the shareholders.
7. Present Value – PV
Definition: The value of how much a future sum of money is worth today. Present value helps us understand how receiving $100 now is worth more than receiving $100 a year from now. See an example of the time value of money here.
8. Profit and Loss Statement – P&L
Definition: A financial statement that is used to summarize a company’s performance and financial position by reviewing revenues, costs and expenses during a specific period of time; such a quarterly or annually.
9. Return on Investment – ROI
Definition: A measure used to evaluate the financial performance relative to the amount of money that was invested. The ROI is calculated by dividing the net profit by the cost of the investment. The result is often expressed as a percentage. See an example here.
10. Cost of Goods Sold – COGS
Definition: The direct expense related to producing the goods sold by a company. This may include the cost of the raw materials (parts) and amount of employee labor used in production
