How are you doing with your Financial English? Would you like to expand your vocabulary? Then check these awesome detailed descriptions.
Stock | a certificate (or electronic or other record) that indicates ownership of a portion of a corporation; a share of stock. Preferred stock promises its owner a dividend that is usually fixed in amount or percent. Preferred shareholders get paid first out of any profits. They have preference. Common stock has no preference and no fixed rate of return. Treasury stock was originally issued to shareholders but has been subsequently acquired by the corporation . Authorized by unissued stock is stock which official corporate action has authorized but has not sold or issued. (Stock also means the stock of goods, the stock on hand, the inventory of a company.)
Sunk costs | money already spent and gone, which will not be recovered no matter what course of action is taken. Bad decisions are made when managers attempt to recoup sunk costs.
Trial balance | at the close of an accounting period, the transactions posted in the ledger are added up. A test or trial balance sheet is prepared with assets on one side and liabilities and capital on the other. The two sides should balance. If they don’t, the accountants must search through the transactions to find out why. They keep making trial balances until the balance sheet balances.
Variable cost | a cost that changes as sales or production change. If a business is producing nothing and selling nothing, the variable cost should be zero. However, there will probably be fixed costs.
Working capital | current assets minus current liabilities. In most businesses the major components of working capital are cash, accounts receivable, and inventory minus accounts payable. As a business grows it will have larger accounts receivable and more inventory. Thus the need for working capital will increase.
Write‐down | the partial reduction in the value of an asset, recognizing obsolescence or other losses in value.
Write‐off | the total reduction in the value of an asset, recognizing that it no longer has any value. Write‐downs and write‐offs are non‐cash expenses that affect profits.
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