What are the terms used in finance?

Here are 10 financial terms everyone should know

  • Compound interest. Compound interest is interest on the amount of money you have deposited or borrowed. …
  • FICO score. Getty Images. …
  • Net worth. …
  • Asset allocation. …
  • Capital gains. …
  • Rebalancing. …
  • Stock options. …
  • Defined-contribution plans.

What are the basic finance terms?

Liability – any financial expense or amount owed. Line of credit – an agreement allowing a borrower to withdraw money from an account up to an approved limit. Liquidate – to quickly sell all the assets of a company and convert them into cash. Liquidation – the process of winding up an insolvent company.

What are the 5 principles of finance?

The five principles are consistency, timeliness, justification, documentation, and certification.

  • Consistency. Transactions must be handled in a consistent manner. …
  • Timeliness. …
  • Justification. …
  • Documentation. …
  • Certification.

What are the 4 general areas of finance?

There are four main areas of finance: banks, institutions, public accounting, and corporate.

What are the 3 major 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 5 types of accounts?

5 Types of accounts

  • Assets.
  • Expenses.
  • Liabilities.
  • Equity.
  • Revenue (or income)

Who is the father of finance?

Eugene F. Fama

Eugene F. Fama, 2013 Nobel laureate in economic sciences, is widely recognized as the “father of modern finance.” His research is well known in both the academic and investment communities. He is strongly identified with research on markets, particularly the efficient markets hypothesis.

What does CS mean in finance?

Conditional Sale

What is Conditional Sale? A Conditional Sale (CS) agreement is similar to Hire Purchase (HP). These are different from ordinary credit agreements because under CS and HP agreements you do not own the car until you have paid off the agreement.

How many types of finance are there?


Finance can be divided broadly into three distinct categories: public finance, corporate finance, and personal finance.

What is important for finance?

Purchasing materials, hiring employees, marketing your business, and developing new products all rely on having adequate funds for investment and will need careful financial management. If the business does not have sufficient funds, it will struggle to operate and in turn be unable to generate a profit.

What are the 7 finance function?

The seven popular functions are decisions and control, financial planning, resource allocation, cash flow management, surplus disposal, acquisitions, mergers, and capital budgeting.

What is cycle of money?

The cycle of money is the motion of cash (funds) from a lender to a borrower and back to the lender.

What is finance and its types?

Finance is defined as the management of money and includes activities such as investing, borrowing, lending, budgeting, saving, and forecasting. There are three main types of finance: (1) personal, (2) corporate, and (3) public/government.

What is P&L in accounting?

The term profit and loss (P&L) statement refers to a financial statement that summarizes the revenues, costs, and expenses incurred during a specified period, usually a quarter or fiscal year.

What is AR balance?

Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivable are listed on the balance sheet as a current asset. AR is any amount of money owed by customers for purchases made on credit.

What is debit and credit?

What are debits and credits? In a nutshell: debits (dr) record all of the money flowing into an account, while credits (cr) record all of the money flowing out of an account.

What is HP in finance?

A Hire Purchase (HP) finance agreement works by providing a loan that equals the total value of your new used car, minus the amount of your initial deposit. You pay back HP finance through monthly repayments at a fixed interest rate, over a pre-agreed term of one to seven years.

What are the 3 types of credit risk?

Types of Credit Risk

  • Credit default risk. Credit default risk occurs when the borrower is unable to pay the loan obligation in full or when the borrower is already 90 days past the due date of the loan repayment. …
  • Concentration risk. …
  • Probability of Default (POD) …
  • Loss Given Default (LGD) …
  • Exposure at Default (EAD)

What are the 5 C’s of lending?

Lenders will look at your creditworthiness, or how you’ve managed debt and whether you can take on more. One way to do this is by checking what’s called the five C’s of credit: character, capacity, capital, collateral and conditions.

What are the two main types of finance?

External sources of financing fall into two main categories: equity financing, which is funding given in exchange for partial ownership and future profits; and debt financing, which is money that must be repaid, usually with interest.

What are the terms used in banking?

10 Basic terminologies that you should know about Indian banking

  • Base rate. Want to take a personal or home loan from your bank? …
  • Cashback. Owning a credit card issued by your bank? …
  • Credit History. …
  • Collateral. …
  • Compound interest. …
  • Demat account. …
  • Electronic Fund Transfer. …
  • Fixed and Floating rate.

What is a Toa in finance?

TOA is the total amount of funds available for programming in a given year, regardless of the year the funds are appropriated, obligated, or expended.

What is TOA payroll?

TOA. Terms Of Agreement. TOA. Table of Authorities (legal documents)