Entrepreneurship Chapter 36 by Gwen Davidson
Rate of interest
Interest expressed as a percentage of the principal.
Fixed Expenses
Costs which stay the same for a certain period of time such as rent or insurance.
Net profit (or loss) after taxes
The amount of money left over after federal, state, and local taxes are subtracted.
Principal
The amount of money that you borrow.
Net worth
The difference between the assets of a business and its liabilities.
Net income
The amount left after operating expenses are subtracted from gross profit.
Asset
Anything of monetary value that you own.
Net pay
What an employee receives after deductions for taxes, insurance, and voluntary deductions.
Liability
A debt that you owe.
Cash Flow Statement
A monthly plan that shows when you anticipate cash coming into the business and when you expect to pay out cash.
Start-up Costs
A projection of how much money you will need for your business's first year of operation.
Balance Sheet
A summary of a business's assets, liabilities, and owner's equity.
Income Statement
A summary of business income and expenses during a specific period, such as a month, quarter, or a year.
Personal Financial Statement
A summary of your current financial condition.
Interest
An amount you pay for the use of money that you borrowed.
Cost of goods sold
The total amount spent to produce or buy the merchandise to be sold.
Gross Sales
The total of all sales for any period of time.
Net Sales
The total of all sales returns and allowances is subtracted from gross sales to get this result.
Total Expenses
The total variable expenses added to total fixed expenses equal these expenses.
Operating expenses
These expenses are divided into variable and fixed expenses.
Variable expenses
These expenses change from one month to the next based upon the needs of the business.
Income Statement
This financial statement is often called a profit and loss statement.
Net Income from Operations
This is determined by subtracting total expenses from gross profit.