Balance Sheet: Assets, Liabilities, and Equity

Balance Sheet

• Lists assets, liabilities and equity at a specific point in time.
• Follows the basic accounting equation: Assets = Liabilities + Equity

Assets

• Cash: Money held in bank accounts, petty cash, or other liquid funds.
• Accounts Receivable: Amounts owed to the company by customers. This is for goods or services already sold.
• Inventory: Goods or materials held for sale, in production, or being manufactured.
• Property, Plant, and Equipment (PP&E): Tangible assets used in business operations, including buildings, machinery, and vehicles.
• Intangible Assets: Non-physical assets such as patents, copyrights, trademarks, and goodwill.

Liabilities

• Accounts Payable: Amounts owed by the company to suppliers or vendors for goods or services purchased.
• Loans Payable: Amounts borrowed from lenders like banks or investors.
• Taxes Payable: Amounts owed to government agencies, including income tax or sales tax.
• Accrued Expenses: Expenses that have been incurred but not yet paid, such as wages or utilities.

Equity

• Common Stock: Shares of ownership in the company which are issued to investors.
• Retained Earnings: Profits reinvested in the company instead of being distributed to shareholders as dividends.
• Dividends: Payments made to shareholders from company profits.

Other Terms - Balance Sheet

• Assets = Liabilities + Equity: This is the fundamental accounting equation that ensures the balance sheet is balanced.
• Current Assets: Assets expected to be converted into cash within one year or within the company's normal operating cycle.
• Non-Current Assets: Assets not expected to be converted into cash within one year or within the company's normal operating cycle.
• Current Liabilities: Liabilities due within one year or within the company's normal operating cycle.
• Non-Current Liabilities: Liabilities not due within one year or within the company's normal operating cycle.

Income Statement

• Presents a company's financial performance over a period of time.
• Reports the revenues, expenses, gains, and losses.

Revenue

• Sales Revenue: Income generated from the sale of goods or services.
• Service Revenue: Income generated from providing services.
• Other Revenue: Income from sources other than sales or services, like interest or rent.

Cost of Goods Sold (COGS)

• Direct Materials: Costs of raw materials or goods purchased for resale.
• Direct Labor: Costs of labor directly involved in producing goods or services.
• Overhead: Indirect costs associated with production, such as utilities or rent.

Operating Expenses

• Selling, General, and Administrative (SG&A) Expenses: Costs linked to selling, marketing, and managing the business.
• Research and Development (R&D) Expenses: Costs for creating new products or services.
• Depreciation: Allocation of the cost of tangible assets during their useful lives.

Non-Operating Items

• Interest Income: Income earned from interest-bearing investments.
• Interest Expense: Costs from borrowing money.
• Taxes: Amounts owed to government agencies for income taxes.

Net Income

• Gross Profit: Sales revenue less COGS.
• Operating Income: Gross profit less operating expenses.
• Net Income: Operating income less non-operating items and taxes.

Other Terms - Income Statement

• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization.
• EPS: Earnings Per Share, calculated by dividing net income by the number of outstanding shares.

Cash Flow

• Tracks the movement of cash both into and out of a company over a period.
• Reflects operating, investing, and financing activities.

Cash Inflows

• Cash Sales: Cash received directly from customers upon sale.
• Accounts Receivable Collections: Cash received from customers who have paid on credit.
• Loan Proceeds: Cash received from loans or debt financing.
• Investment Income: Cash received from investments, such as interest or dividends.

Cash Outflows

• Cash Purchases: Cash paid for goods or services immediately.
• Accounts Payable Payments: Cash paid to suppliers or vendors for goods or services purchased on credit.
• Salaries and Wages: Cash paid to employees for their work.
• Taxes and Benefits: Cash paid for taxes, benefits, and other expenses linked to employees.
• Capital Expenditures: Cash spent on long-term assets, buildings, plants, and equipment, for example.

Cash Flow Categories

• Operating Cash Flows: Pertains to cash flows relating to the primary business activities of the company.
• Investing Cash Flows: Cash flows linked to long-term investments.
• Financing Cash Flows: Cash flows relating to debt and equity activities.

Other Terms - Cash Flow

• Beginning Cash Balance: The initial cash balance at the start of the projection period.
• Ending Cash Balance: The final cash balance at the end of the projection period.
• Net Change in Cash: The difference between the beginning and ending cash balances.
• Cash Flow Margin: The percentage of sales that is converted into cash flow.

Summary of Sales

• Overview of the various elements of sales

Sales Performance

• Sales Revenue: The total income generated from sales.
• Sales Growth: The increase in sales over a period of time.
• Conversion Rate: The percentage of leads that convert into actual sales.

Sales Channels

• Direct Sales: Sales made directly to customers.
• Indirect Sales: Sales via intermediaries, such as distributors or wholesalers.
• E-commerce Sales: Sales made online.

Sales Metrics

• Average Order Value (AOV): The average amount spent per order.
• Customer Acquisition Cost (CAC): Cost of acquiring a new customer.
• Customer Lifetime Value (CLV): Total value a customer brings over their relationship with a company.

Sales Strategies

• Upselling: Selling higher-priced products or services to increase revenue per sale.
• Cross-Selling: Selling related or complementary products or services.
• Account Management: Managing relationships with existing customers.

Sales Roles

• Sales Representative: The person responsible for making sales.
• Account Manager: The person who is in charge for managing existing customer relationships.
• Sales Manager: The person responsible for leading a sales team.

Cash Receipt

• Cash Sale: A sale where the customer pays cash immediately.
• Accounts Receivable: Amounts owed to the business by customers for goods or services they have purchased on credit.
• Cash Receipt: The act of receiving cash from a customer or another source.

Types of Cash Receipts

• Cash: Physical currency received.
• Check: A written order asking a bank to pay a specified amount.
• Electronic Funds Transfer (EFT): Funds transferred electronically from one bank account to another.
• Credit Card: Payment using a credit card by a customer.

Cash Receipts Process

• Receipt: The act of getting cash or other payment.
• Recording: Documenting the cash receipt in the company's accounting records.
• Depositing: Putting the cash into a bank account.

Other Terms - Cash Receipt

• Cash Receipts Journal: Book or digital record used for listing cash receipts.
• Deposit Slip: A document used to record the deposit of cash into a bank account.
• Cash Receipt Voucher: Document used to record and verify cash amounts.