AN ASSIGNMENT ON FINANCIAL TERMINOLOGY
involving cash is recorded. A company selling merchandise on credit will record these salesin a Sales account and in an Accounts Receivable account.
An individual or organization that owes a debt or has an obligation to another party. A debtor is a person or entity that
money. In other words, the debtor has a debtor legal obligation to pay an amount to another person or entity. For example, if you borrow$10,000 from a bank, you are the debtor and the bank is the creditor.
The person or organization to whom the debtor owes money or has some other form of legal obligation.An individual, business or other organization to whom money or something of value is owed.Someone who has granted credit. If a bank lends a company money, the bank is a creditor. If a supplier sold merchandise to a company on credit, the supplier is a creditor.
Fees earned from providing services and the amounts of merchandise sold.Under the accrual basis of accounting, revenues are recorded at the time of delivering theservice or the merchandise, even if cash is not received at the time of delivery. Often the termincome is used instead of revenues.For acompany, this is the totalamountof earnings by the company
for goods soldor servicesprovided during a certain timeperiod. It also includes allnet
sales,exchangeof assets; interestand any other increase inowner's equityand is calculated
before anyexpensesare subtracted.
An advantageous gain or return; benefit.
The return received on a business undertaking after all operating expenses have been met.
The return received on an investment after all charges have been paid. Often used in theplural.
The rate of increase in the net worth of a business enterprise in a given accounting period.
Income received from investments or property.
The amount received for a commodity or service in excess of the original cost.
Best knownmeasureof thesuccessof anenterprise, it is thesurplusremaining
after total costsare deducted fromtotal revenue, and the basis on whichtaxis
computed anddividendispaid. Profit is reflected inreductioninliabilities, increase
inassets, and/or increase inowners' equity. It furnishesresourcesfor investingin
futureoperations, and its absence mayresultin the extinction of thefirm. As an
indicator of comparativeperformance, however, it is less valuable thanreturn on
investment (ROI). Ineconomics, totalcostsmust include acosttocover thenormal
profitfor the firm. Also calledearnings,gain, or income.
D E P A R T M E N T O F F I N A N C E , V I S W A S S