Net worth
Investorline In business, net worth (sometimes called net assets) is the total assets minus total outside liabilities of an individual or a company. For a company, this is called shareholders’ preference…
Expense
In common usage, an expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs.…
Pareto principle
The Pareto principle (also known as the 80-20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the…
Deferral
Deferred, in accrual accounting, is any account where the asset or liability is not realized until a future date (accounting period), e.g. annuities, charges,taxes, income, etc. The deferred item may…
Debits and credits
Debit and credit are the two aspects of every financial transaction. Their use and implication is the fundamental concept in the double-entry bookkeeping system, in which every debit transaction must…
Cost of goods sold
Cost of goods sold (COGS) refers to the inventory costs of those goods a business has sold during a particular period. Costs are associated with particular goods using one of…
Contingent liability
Contingent liabilities are liabilities that may or may not be incurred by an entity depending on the outcome of a future event such as a court case. These liabilities are…
Overcapitalisation
Overcapitalisation refers to an economic phenomenon whereby the valuation/ price of an asset is superior to its ‘real’ value – however difficult to define – therefore putting a strain on…
Undercapitalization
Under-capitalization refers to any situation where a business cannot acquire the funds they need. An under-capitalized business may be one that cannot afford current operational expenses due to a lack…
Finance lease
A finance lease or capital lease is a type of lease. It is a commercial arrangement where: the lessee (customer or borrower) will select an asset (equipment, vehicle, software); the…