Learning some basic business terms helps a lot in doing business. Here are 15 such words.
Entrepreneurs can keep this concept in their initial business vocabulary. Systematic recording and reporting of business financial transactions, falls under accounting. Accounting is often quite complicated. It would be better to hire a professional person to handle it.
‘Accounts Receivable’ is the money you receive from the customer in exchange for the goods or services you provide. This total will give you an idea of how much money your business owes at any given time.
‘Accounts Payable’ is how much money people who deliver goods and services to you get.
‘Assets’ refers to the total financial assets of your business. These are usually considered either current or fixed. Current, i.e. current or short-term assets include cash or inventory. Fixed or long-term assets include equipment or land.
Liability for money owed to you by another person or entity. Like assets, you need to account for liabilities in the short or long term.
Current or short-term liabilities include money owed to a supplier. Many business loans are long-term.
Revenue Or Revenue
Revenue is the amount of money you get from a business activity at a given time. You can calculate your revenue by multiplying the cost per unit of the product or service by the unit sold.
Does your business have any expenses for equipment, utilities or inventory? These are all examples of costs. That is, the money you spend to keep your business running. Those who look after their own business, i.e. self-employed, have tax-deductibility of legitimate business expenses.
The owner’s share of the business assets is usually expressed as a percentage. This is owner’s equity.
This important business document provides an idea of the business’s assets, liabilities and owner’s equity.
Net Profit or Gross Profit
It is also recognized as the key word of business. Net profit expresses total revenue and total expenses. This calculation is very important while paying taxes. Because you have to pay self-employment tax as a percentage of gross profit.
Net Loss Or Total Loss
If your total expenses exceed your total revenue, you will have a net loss. One of the reasons for keeping costs under control in the organization is to avoid net loss or total loss.
Profit Margin Or Profit Index
This profit margin is a measure of how much profit you are making compared to total sales. There are three types of profitability ratios: gross, operating and net. These ratios can be measured by dividing profit by revenue.
Cash Flow Or Cash Flow
Cash flow is the amount of money coming in or going out of the business. The business objective is to increase the flow of income rather than the flow of expenses. This is called positive cash flow.
Return On Investment Or Return On Investment
Your Return on Investment or ROI shows how much profit or loss you made compared to the money you put into the business. ROE can be calculated by dividing the total profit by the cost of investment.
Bitubi / Bitusi
Is the purpose of your business to provide goods or services for another business? If so, the business you are conducting is called B-to-B. On the other hand, the opposite of Bitubi trading is Bitusi trading. In this type of business, products or services are provided directly to the consumer or customer.