ABF 2.2 Key Terms

Front

What is 'Salvage value'?

Back

The market value of a depreciable asset when sold.

Front

What does the term 'Breakeven (B/E)' mean?

Back

Having income equal to expenditure.

Front

What is 'Depreciation'?

Back

Decrease in the value of assets due to wear and tear.

Front

What does 'Return on assets (ROA)' measure?

Back

The ratio of net income to total assets.

Front

What is the 'Principal' in financial terms?

Back

The original amount of money lent.

Front

What is 'Asset'?

Back

A resource owned by a business that has economic value.

Front

What is 'Liability'?

Back

A financial obligation or debt owed by a business.

Front

What does 'Equity' represent in finance?

Back

The ownership interest in a company, calculated as assets minus liabilities.

Front

What is 'Revenue'?

Back

The income generated from normal business operations.

Front

What is 'Expense'?

Back

The costs incurred in the process of earning revenue.