Question: What Are The Basic Terms In Finance?

What is the role of finance?

Finance involves managing the firm’s money.

The financial manager must decide how much money is needed and when, how best to use the available funds, and how to get the required financing.

The financial manager’s responsibilities include financial planning, investing (spending money), and financing (raising money)..

What is finance in a business?

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.

How can I improve my financial vocabulary?

3 Quick Tips for Increasing Your Financial VocabularyMake the Business Section Your Friend. Most major news websites have a Business Section featuring business news stories. … Sit Down with a Good Finance Book. … Note the Use of Financial Language at Work. … Interest Rate. … Investment. … External capital. … Cash outflow. … Revenue.More items…

What are the 3 areas of finance?

Finance consists of three interrelated areas: (1) money and credit markets, which deals with the securities markets and financial institutions; (2) investments, which focuses on the decisions made by both individuals and institutional investors; and (3) financial management, which involves decisions made within the …

What are the terms used in business?

Business terms to knowAccounting. This concept should be in every entrepreneur’s arsenal of basic business terms. … Accounts receivable. This is the amount of money your customers or clients owe your business for goods or services you supply. … Accounts payable. … Assets. … Liabilities. … Revenue. … Expenses. … Owner’s equity.More items…•

What are financial activities?

Financial activities are activities that companies undertake to help achieve their economic goals and objectives. … Purchasing and selling assets or products, organizing accounts, and maintaining accounts, for example, are financial activities. Arranging loans, selling bonds or stocks are also financial activities.

What are the 6 principles of finance?

There are six basic principles of finance, these are:Principles of risk and return.Time value of money.Cash flow principle.Profitability and liquidity.Principles of diversity.Hedging principle.

What are the basic financial terms?

Here are 10 essential finance terms every entrepreneur needs to know.Assets. First on the list of financial terms, assets are the economic resources a business has. … Liabilities. … Expenses. … Accounts receivable. … Cash flow. … Cash flow statement. … Profit and loss. … Income statement.More items…•

What are the four basic principles of finance?

There are four basic principles of financial accounting measurement: (1) objectivity, (2) matching, (3) revenue recognition, and (4) consistency. 3. A special method, called the equity method, is used to value certain long-term equity investments on the balance sheet.

What are the 5 principles of finance?

There are five overall principles to managing the financial transactions of sponsored research funds. Policies and procedures within Research Accounting Services have been developed in support of these principles. The five principles are consistency, timeliness, justification, documentation, and certification.

What is the most important word in finance?

When it comes to personal finance blogs, you’ll see words like debt, budget, net worth, income, expenses, and taxes play prominent roles in articles. … However, I believe that the two most important words are simply “cash” and “flow” or together… cash flow.

What are the different types of finance?

There are mainly two types of finance:Debt Finance and.Equity Finance.

What are the 4 areas of finance?

Question: Discuss the four basic areas of finance. Which area is closely related to your current work? Corporate finance, Investments, Financial institutions, International finance.

What is meant by finance?

Finance is a broad term that describes activities associated with banking, leverage or debt, credit, capital markets, money, and investments. Basically, finance represents money management and the process of acquiring needed funds.

What are the basic principles?

1. basic principle – principles from which other truths can be derived; “first you must learn the fundamentals”; “let’s get down to basics” fundamental principle, fundamentals, basics, bedrock. principle – a basic truth or law or assumption; “the principles of democracy”