Financial Terms Flashcards

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Asset

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An asset is anything of value or a resource of value that can be converted into cash. Examples include real estate, equipment, and inventory.

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Financial Asset

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A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and stocks.

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Liability

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A liability is something a person or company owes, usually a sum of money. Liabilities are settled over time through the transfer of economic benefits including money, goods, or services.

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Net Worth

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Net worth is the value of all assets, minus the total of all liabilities. It is a measure of what an entity is worth.

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Net Worth Statement

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A net worth statement is a financial document that details an individual's or entity's assets and liabilities, providing a snapshot of their financial position at a given point in time.

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Retirement

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Retirement is the period of life when one chooses to permanently leave the workforce behind. The age at which this happens can vary, depending on the individual's financial situation and personal preferences.

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Budget

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A budget is an estimate of income and expenditure for a set period of time. It is a financial plan that helps individuals or organizations manage their money.

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Expense

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An expense is the cost required for something; the money spent on something. Expenses can be categorized into fixed, variable, and periodic expenses.

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Fixed Expense

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A fixed expense is a cost that does not change from period to period, such as rent or a mortgage payment.

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Income

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Income is money received, especially on a regular basis, for work or through investments.