- These fall into three categories. Current assets include cash on
hand, investments that can be liquidated quickly, inventory, and
payments due from customers. Fixed assets are permanent aspects of
the business: the property and building, equipment and fixtures, and
any other tangible property. Finally, there are intangible assets,
which covers patents on inventions or processes, trademarks, and
Liabilities - This includes the debts a business owes and any
other claims on company assets. Current liabilities entail those
debts that will be settled during the current fiscal year. Long-term
liabilities will include things like mortgages and equipment costs,
the type items that will take several years to pay off.
Owner's equity - This is the owner's investment in a
business. How it's actually listed will vary depending on whether
the organization is a sole proprietorship, partnership, or
corporation. For a single-owner company, the equity would be the
difference between assets and liabilities. In a partnership, the
equity would be each owner's share of the business. And with a
corporation, that's generally the amount of outstanding common
Unearned income - This is revenue that will be earned once the
terms of a contract have been fulfilled. For instance, a
neighborhood youth is to rake your yard this weekend for $15. Until
the work is done, the youth has $15 in unearned income. Once the
work is done and payment made, the unearned income has become
Cash flow - This is a means of measuring a company's
financial health measuring cash receipts against cash payments over
a given period of time. It is the pattern of income and
expenditures, and the resulting availability of cash.
Capital - In the broader arena of economics, capital refers to
equipment or machinery that permits a greater production of goods.
For the purposes of financing, capital means money.