a. Debts or financial obligations owed by a person or business. This includes money owed to suppliers, banks, or taxes owed. b. Anything a person or business owns that has monetary value. This could be cash, property, equipment, or even investments. c. The owner's claim on the business assets, essentially the difference between assets and liabilities. In simpler terms, it's the net worth. d. Income generated from selling goods or services. e. Money remaining after subtracting expenses from revenue (positive net income). f. Money owed to suppliers for goods or services received but not yet paid for. g. Also known as the profit and loss statement, this shows a company's revenue (income) and expenses over a specific period. h. The movement of cash in and out of a business. i. When expenses exceed revenue (negative net income). j. Costs incurred in running a business, like rent, salaries, or supplies. 1. Assets 2. Liabilities 3. Equity 4. Income statement 5. Revenue 6. Expenses 7. Profit 8. Loss 9. Accounts payable 10. Cash flow
Answer (1)
To understand the terms related to finance and business operations that you've listed, let's match each description with the correct term:
Debts or financial obligations owed by a person or business : This refers to 'Liabilities'. Liabilities include items like money owed to suppliers (often called 'accounts payable'), bank loans, or taxes owed.
Anything a person or business owns that has monetary value : These are 'Assets'. Assets can include cash, property, equipment, and investments—all of which have value and can contribute to the financial health of a business.
The owner's claim on the business assets, essentially the difference between assets and liabilities : This is known as 'Equity'. Equity represents the value that would be returned to shareholders if all the assets were liquidated and all the company's debts repaid.
Income generated from selling goods or services : This is referred to as 'Revenue'. Revenue is the total income a business earns from its normal business activities, like selling products and services.
Money remaining after subtracting expenses from revenue (positive net income) : This is 'Profit'. Profit indicates the financial gain made, meaning the business has earned more from its sales than it has spent on costs.
Money owed to suppliers for goods or services received but not yet paid for : These are 'Accounts Payable'. This term specifically refers to the short-term liabilities representing the bills a company has not yet paid.
Also known as the profit and loss statement, this shows a company's revenue (income) and expenses over a specific period : This is known as the 'Income Statement'. It's a key financial statement used to assess a company's performance and profitability over a specific time frame.
The movement of cash in and out of a business : This refers to 'Cash Flow'. Cash flow tracks how much money is coming into and flowing out of the business, which is critical for managing its financial health and ensuring there is enough cash to cover expenses.
When expenses exceed revenue (negative net income) : This situation is called a 'Loss'. A loss indicates the company spent more than it earned during a specific period.
Costs incurred in running a business, like rent, salaries, or supplies : These are 'Expenses'. Expenses represent the costs that are necessary for running the business, subtracted from revenue to determine profit.
Understanding these terms helps in comprehending basic financial operations of businesses and individuals, and they are fundamental concepts for anyone studying business or finance.
