Glossary of Terms


That which can be owned. Examples : Cash, accounts receivable, equipment, buildings, stocks, bonds, patents, goodwill.

Current Assets

Type of asset that is cash or will be turned into cash in the normal course of doing business. Examples : Cash, Accounts Receivable, Inventory.

Fixed Assets


Other Assets

Examples Good will

Balance Sheet

"Stock" view of the company: Balances the assets the company owns against liabilites and owner equity (Assets = Liabilites + Owner Equity). Describes the condition of a company on a single day.

Cash Flow

Amounts of cash or other current assets, converted to cash value, that come in to or go out of the business (or your pocket). For example: monthly sales or ongoing maintenance costs.

Cash Flow Statement



An adjustment to a stated value using time-value-of-money calculations. Example: finding the present worth using a given future worth and interest rate.


From Wikipedia: "A flow variable is measured over an interval of time. Therefore, a flow would be measured per unit of time (say a year)."

Income Statement


What a company owes to other people, government, or companies. Examples

Current Liability


Owner Equity

The portion of the company the owner(s) of the company own. Depends on the type of company


Sole Proprietorship


  1. Ownership "slices" of a publicly-held company
    1. Preferred Stock: they get a set % or $$ amount
    2. Common Stock: last claim
  2. A thing that does not change with time (flux). From Wikipedia: "A stock variable is measured at one specific time, and represents a quantity existing at that point in time (say, December 31, 2004), which may have accumulated in the past."

Working Capital

Current assets minus current liabilities. The amount of money you have, right now, to work with. Current liabilities are removed because they are short-term "loans" - they are amounts you will need to pay out in the near future.

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