Glossary of Retail Financial Terms

From "Accounts Payable" to the "Working Capital Wheel", your quick reference resource for the financial terms used in retail.

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ACCOUNTS PAYABLE

A liability to a creditor, generally an open account. Usually limited to unpaid purchases of goods and services.

ACCOUNTS RECEIVABLE

A claim against a debtor, generally an open account. Usually limited to uncollected sales of goods and services and distinguished from deposits, accruals, and other items not arising out of everyday transactions.

ACCRUAL BASIS OF ACCOUNTING

Under the accrual basis of accounting, revenue (sales) is reported in the income statement for the period when it is earned (regardless of when it is collected), and expenses reported in the period when they occur (regardless of when the cash disbursement is made).

ACCRUED EXPENSES

Expenses which have been incurred but have not been paid.

ADMINISTRATIVE EXPENSES

Officers' salaries, wages, and benefits, professional fees, vehicles and all other general and administrative expenses.

ASSET

Any owned physical object (tangible) or right (intangible) having a money value; expressed in terms of its cost, depreciated cost, or less frequently some other value.

BALANCE SHEET

The portion of the financial statement which shows the financial condition of a business at a particular point in time; shows Assets, Liabilities and Owner's Equity, and always balances according to the formula: Assets = Liabilities + Equity (Net Worth).

BEGINNING INVENTORY

Can be at cost or retail; same as ending inventory of previous period.


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