An Accounting Glossary for the Non-Financial Manager

Coworkers in a meeting

Most managers can get by way of with a fundamental understanding of economic acumen. That’s why we've got business finance specialists, and it’s an awesome issue we do.

Here’s a simple glossary of finance and accounting phrases for the non-financial supervisor.

Accruals

An amount incurred as an cost in a given accounting period, but no longer paid through the end of that period.

Allocation

The procedure of spreading costs from one fee class to several others, typically primarily based on usage.

Amortized Expenses

The costs for belongings which includes homes and computer systems, that are expensed over the years to mirror their usable existence.

Assets

Anything owned via the employer having a financial price; i.e., constant assets like buildings, flowers and equipment, and cars.

Balance Sheet

A snapshot in time of who owns what in the organization, and what belongings and debts constitute the price of the enterprise. The stability sheet equation is: capital + liabilities = belongings.

Break-even Point

The point while a enterprise' sales equals a business' costs.

Budget Forecast

The amount of money deliberate to spend over the route of a duration, usually a year.

Budget Variance

The difference among a finances forecast and real expenditures.

Cost-Benefit Analysis

Cost-Benefit Analysis evaluates whether, over a given time body, the blessings of the brand new funding, or the new enterprise possibility, outweigh the associated charges.

Direct vs. Indirect Costs

Costs which are directly related to the manufacture of a product. Indirect prices cannot be at once tied to a selected product.

Earnings Per Share (EPS)

A generally watched indicator of a employer’s monetary overall performance – it equals internet earnings divided by using the wide variety of stocks exceptional.

Fixed Assets

Assets that are hard to convert to coins. For instance, homes, and device. Sometimes called plant property.

Gross Margin

Gross Margin is a ratio that measures the percentage of gross profit relative to income sales.

Gross Profit

The sum left over in spite of everything direct product fees or expenses of goods bought have been subtracted from revenues.

Hurdle Rate

The fee of go back on funding bucks required for a assignment to be profitable. It is typically a better fee of return than what would were received by making an investment the capital in low or mild danger monetary devices.

Intangible Assets

Non-bodily property with out a constant value, which includes goodwill and intellectual assets rights.

Inventory

Goods or substances a business is maintaining for sale.

Liabilities

A widespread term for what the enterprise owes. Liabilities are long-term loans of the sort used to finance the business and short-time period debts or money owing as a result of buying and selling activities thus far.

Net Present Value (NPV)

The economic price of an funding, calculated by way of subtracting the value of the investment from the present value of the funding’s destiny income. Due to the time value of cash, the investment’s future profits have to be discounted with a purpose to be expressed accurately in today’s dollars.

Operating Expenses

Expenses that occur in working a commercial enterprise, for instance, administrative worker salaries, rents, sales, and advertising fees, as well as other costs of commercial enterprise now not without delay attributed to manufacturing a product.

Overhead

An cost that can't be attributed to anybody single a part of the organization's sports

Payback Period

The length of time had to recoup the value of a capital funding; the time that transpires before an investment pays for itself.

Productivity Measures

Indicators which include retail income-in line with-worker or gadgets-produced-in step with-employee, which offer a degree of workforce performance and effectiveness.

Return on Investment (ROI)

A monetary ratio measuring the cash return from an funding relative to its fee.

Sunk Costs

Prior funding that can't be tormented by cutting-edge decisions. These ought to no longer be factored into the calculation of the profitability of a assignment.

Time Value of Money

The precept that a greenback acquired today is worth extra than a dollar obtained at a given factor inside the future. Even with out the outcomes of inflation, the greenback obtained nowadays might be worth extra due to the fact it may be invested immediately, incomes additional revenue.

Variable Costs

Costs which can be incurred when it comes to sales volume; examples consist of the cost of materials and sales commissions.