Finance Terms

What is a liability in finance?

• A financial gain for an entity.

• An obligation that an entity owes to another party.

• An asset that an entity owes to another party.

• A physical possession owned by an entity.

Define equity in financial terms.

• The total amount of money a company has borrowed

• A type of debt instrument issued by a company

• The profit generated by a company in a fiscal year

• Ownership interest in a company representing the residual value of assets after deducting liabilities.

Explain the concept of budget in finance.

• A budget in finance is a term used to describe the act of investing in the stock market

• A budget in finance is a financial plan that outlines expected income and expenses over a specific period. It helps individuals or organizations manage their finances by setting limits on spending and saving goals.

• A budget in finance is a type of loan taken from a bank

• A budget in finance refers to the process of printing money by the government

What does revenue refer to in finance?

• Net profit after tax

• Total income generated by a business through its normal operations.

• Total expenses incurred by a business

• Amount of debt owed by a business

Define expense in financial terms.

• Amount saved in a bank account

• Value of assets owned

• Cost incurred or money spent on goods or services.

• Money earned from investments

What is meant by profit in finance?

• Profit in finance is the financial gain made when the amount earned exceeds the expenses and costs incurred.

• Profit in finance is the total revenue generated by a company.

• Profit in finance is the value of assets owned by a business.

• Profit in finance is the amount of money spent on investments.

Explain the concept of profit and loss in finance.

• Profit and loss refer to the color of financial documents

• Profit and loss are determined by the number of employees in a company

• Profit and loss are related to weather patterns

• Profit and loss in finance are the financial gains or losses resulting from the difference between revenue earned and expenses incurred.

What is an invoice and its role in finance?

• An invoice is a tool used for marketing purposes, not finance

• An invoice is a document detailing products/services provided, amount due, and payment terms. It is essential for tracking sales, revenue, and accounts receivable in finance.

• An invoice is a document detailing expenses, it is not relevant in finance

• An invoice is a type of financial investment with high returns

Define a spreadsheet and its importance in tracking expenses and revenue.

• A spreadsheet is a digital document used to organize and analyze data in rows and columns. It is important in tracking expenses and revenue as it allows for easy input, calculation, and visualization of financial information.

• A spreadsheet is a physical notebook used to track expenses and revenue.

• A spreadsheet is a type of software used for video editing.

• A spreadsheet is a type of fruit commonly found in tropical regions.

Explain the significance of financial documents in business transactions.

• Financial documents are only needed for tax purposes in business transactions.

• Financial documents are irrelevant and can be omitted in business transactions.

• Financial documents are primarily used for marketing purposes in business transactions.

• Financial documents are essential for recording, tracking, and analyzing financial transactions in a business.