Amounts due to vendors or suppliers for goods or services received that have not yet been paid for. The sum of all outstanding amounts owed to vendors is shown as the accounts payable balance on the company’s balance sheet. The increase or decrease in total AP from the prior period appears on the cash flow statement.

A resource with economic value that an individual or business owns or controls with the expectation that it will provide a future benefit. Assets are reported on a balance sheet and are bought or created to increase value. An asset can be thought of as something that, in the future, can generate cash flow, reduce expenses, or improve sales, regardless of whether it’s manufacturing equipment or a patent. 

A financial statement that reports an individual’s or company’s assets, liabilities, and equity at a specific point in time. The balance sheet is one of the three core financial statements that are used to evaluate a business.

An estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money. To manage your monthly expenses, prepare for life’s unpredictable events, and be able to afford big-ticket items without going into debt, budgeting is important. Keeping track of how much you earn and spend doesn’t have to be drudgery, doesn’t require you to be good at math, and doesn’t mean you can’t buy the things you want. It just means that you’ll know where your money goes, you’ll have greater control over your finances.

Explains how a company plans to compete in a market and how it intends to grow at a profit. The success of any business is determined by the effectiveness of the strategy it follows.

The movement of money in and out of a business. Cash received signifies inflows, and cash spent signifies outflows. The cash flow statement is a financial statement that reports on a company’s sources and usage of cash over some time.

Financial accounts that are used for day-to-day cash deposits and withdrawals. You can access your money with a debit card, through online transfers or by writing checks. Checking accounts are handy, all-purpose places to keep money in the short- to medium-term. Your employer can directly deposit your paychecks in the account, you can link it to payment apps, you can pay bills from it and more. Checking accounts are a building block to manage your money and make all kinds of financial tasks easier.

The ability to borrow money or access goods or services with the understanding/knowledge — and promise — that you’ll have to repay it in the future, often with interest. 

Money borrowed by one party from another. Many businesses and individuals use debt as a method of making large purchases that they could not afford under normal circumstances. In a debt-based financial arrangement, the borrowing party gets permission to borrow money under the condition that it must be paid back at a later date, usually with interest.

Periodic lows and highs in measures of economic activity, such as unemployment and inflation. These fluctuations affect wages, consumer demand, and the prices of raw materials. Seasonal fluctuations are short-term and generally follow a consistent pattern each year, but cyclical fluctuations could last for years. Small and large businesses should be prepared to distinguish between cyclical and seasonal variations to manage changes in expenses and revenues through these fluctuations.

Equity represents the value that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company’s debts were paid off. It can also be a degree of residual ownership in a firm or asset after subtracting all debts associated with that asset.

Cash reserve that’s specifically set aside for unplanned expenses or financial emergencies. Some common examples include equipment repairs, home repairs, medical bills, or a loss of income.

Financing is the process of providing funds for business activities, making purchases, or investing. Financial institutions, such as banks, are in the business of providing capital to businesses, consumers, and investors to help them achieve their goals. The use of financing is vital in any economic system, as it allows companies to purchase products out of their immediate reach.

Personal, big-picture objectives you set for how you’ll save and spend money; they can be things you hope to achieve in the short term or further down the road that form the basis of a holistic financial plan. Not to be confused with a budget or financial plan, financial goals are specific and measurable milestones that, when reached, bring you closer to your ideal future. It’s often easier to reach your goals if you identify them in advance.

A company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange. Financial institutions encompass a broad range of business operations within the financial services sector including banks, trust companies, insurance companies, brokerage firms, and investment dealers. Everyone living in a developed economy has an ongoing or at least periodic need for the services of financial institutions.