Do you want to get better in the use of financial terms? You’ve come to the right place, then. In today’s article we explain the following concepts:
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Equity
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Expenditure
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Expense
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Fiscal year
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Fixed asset
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Fixed cost
Equity | the owners’ share of a business.
Expenditure | an expenditure occurs when something is acquired for a business | an asset is purchased, salaries are paid, and so on. An expenditure affects the balance sheet when it occurs. However, an expenditure will not necessarily show up on the income statement or affect profits at the time the expenditure is made. All expenditures eventually show up as expenses, which do affect the income statement and profits. While most expenditures involve the exchange of cash for something, expenses need not involve cash. (See expense below.)
Expense | an expenditure which is chargeable against revenue during an accounting period. An expense results in the reduction of an asset. All expenditures are not expenses. For example, a company buys a truck. It trades one asset ‐ cash ‐ to acquire another asset. An expenditure has occurred but no expense is recorded. Only as the truck is depreciated will an expense be recorded. The concept of expense as different from an expenditure is one reason financial reports do not show numbers that represent spendable cash. The distinction between an expenditure and an expense is important in understanding how accounting works and what financial reports mean. (To expense is a verb. It means to charge an expenditure against income when the expenditure occurs. The opposite is to capitalize.)
Fiscal year | an accounting year than begins on a date other than January 1.
Fixed asset | see asset.
Fixed cost | a cost that does not change as sales volume changes (in the short run.) Fixed costs normally include such items as rent, depreciation, interest, and any salaries unaffected by ups and downs in sales.
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Inglés para empresas en Alicante, Murcia, Madrid y Andalucía