Budgeting and Financial Management
Expert-defined terms from the Certificate in Executive Housekeeping Management and Operations course at London School of Planning and Management. Free to read, free to share, paired with a globally recognised certification pathway.
Budgeting and Financial Management Glossary #
Budgeting and Financial Management Glossary
A #
A
1. Accounting #
The process of recording, summarizing, analyzing, and reporting financial transactions of a business or organization.
2. Accrual Basis #
A method of accounting where revenues and expenses are recognized when they are earned or incurred, regardless of when cash is exchanged.
3. Asset #
Anything of value owned by a business or individual, such as cash, equipment, inventory, or property.
4. Accounts Payable #
The amount of money a business owes to its suppliers for goods or services purchased on credit.
5. Accounts Receivable #
The amount of money owed to a business by its customers for goods or services sold on credit.
6. Amortization #
The process of spreading the cost of an intangible asset over its useful life.
7. Annual Budget #
A financial plan for the upcoming year that outlines expected revenues and expenses.
8. Accruals #
Revenues or expenses that have been earned or incurred but not yet recorded in the accounting records.
9. Allocation #
The process of distributing resources, such as money or time, among different departments or projects.
10. Asset Management #
The practice of managing a company's assets to maximize returns and minimize risks.
B #
B
11. Balanced Budget #
A budget in which revenues equal expenses, resulting in no deficit or surplus.
12. Break #
Even Analysis: A financial calculation that determines the point at which total revenues equal total expenses, resulting in neither profit nor loss.
13. Budget #
A financial plan that outlines expected revenues and expenses over a specific period.
14. Budget Variance #
The difference between the budgeted amount and the actual amount spent or received.
15. Budgeting #
The process of creating a budget and monitoring actual performance against the budget.
16. Business Plan #
A document that outlines a company's goals, strategies, and financial forecasts.
17. Balance Sheet #
A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
18. Break #
Even Point: The level of sales at which total revenues equal total expenses, resulting in neither profit nor loss.
19. Bookkeeping #
The process of recording financial transactions in a systematic and organized manner.
20. Budget Cycle #
The process of creating, implementing, and monitoring a budget over a specific period, usually a year.
C #
C
21. Cash Flow #
The movement of money into and out of a business.
22. Capital Expenditure #
Money spent on acquiring, upgrading, or maintaining fixed assets, such as buildings or equipment.
23. Cost Control #
The process of managing and reducing expenses to stay within budget.
24. Cost #
Benefit Analysis: A financial calculation that compares the costs of a project or investment with the benefits it will generate.
25. Cost Allocation #
The process of assigning costs to specific activities or departments.
26. Cost #
Volume-Profit Analysis: A financial calculation that examines the relationship between costs, volume of sales, and profits.
27. Cash Budget #
A budget that forecasts cash inflows and outflows over a specific period.
28. Contingency Plan #
A plan that outlines how a business will respond to unexpected events or emergencies.
29. Capital Budgeting #
The process of evaluating and selecting long-term investments that will yield the highest return.
30. Cost of Goods Sold (COGS) #
The direct costs associated with producing goods or services sold by a company.
D #
D
31. Depreciation #
The decrease in value of a fixed asset over time.
32. Debt Financing #
Obtaining funds by borrowing money, typically through loans or bonds.
33. Debt #
to-Equity Ratio: A financial ratio that compares a company's debt to its equity, used to assess its financial leverage.
34. Direct Costs #
Costs that can be directly attributed to a specific product or project.
35. Double #
Entry Accounting: A system of accounting where every transaction is recorded in two separate accounts to maintain balance.
36. Depreciation Expense #
The portion of an asset's cost that is allocated as an expense over its useful life.
37. Deferred Revenue #
Revenue that has been received but not yet earned, typically recorded as a liability.
38. Direct Labor #
The cost of labor directly involved in producing goods or providing services.
39. Direct Materials #
The cost of raw materials directly used in producing goods.
40. Debt Ratio #
A financial ratio that compares a company's debt to its total assets, used to assess its solvency.
E #
E
41. Expense #
The cost incurred in the process of generating revenues.
42. Equity #
The portion of a company's assets that belongs to the owners after deducting liabilities.
43. External Financing #
Obtaining funds from outside sources, such as banks or investors.
44. Fixed Costs #
Costs that remain constant regardless of the level of production or sales.
45. Financial Statement #
A report that summarizes a company's financial position and performance.
46. Forecasting #
The process of predicting future trends and events based on historical data and analysis.
47. Financial Analysis #
The process of evaluating a company's financial performance and health.
48. Financial Management #
The process of planning, organizing, directing, and controlling an organization's financial resources.
49. Financial Ratios #
Quantitative measures used to evaluate a company's financial performance.
50. Fixed Assets #
Long-term assets that are not intended for sale, such as buildings, machinery, or vehicles.
F #
F
51. Forecast #
A projection of future financial performance based on historical data and assumptions.
52. Financial Forecast #
An estimate of future financial results, typically for the next year or quarter.
53. Financial Planning #
The process of setting financial goals and creating a plan to achieve them.
54. Financial Reporting #
The process of preparing and presenting financial information to stakeholders.
55. Financial Risk #
The possibility of financial loss or uncertainty due to market fluctuations or other factors.
56. Financial Statement Analysis #
The process of analyzing a company's financial statements to assess its financial health.
57. Fixed Budget #
A budget that remains unchanged regardless of actual performance.
58. Flexible Budget #
A budget that adjusts based on changes in activity levels or other factors.
59. Fundamental Analysis #
An investment strategy that evaluates a company's financial statements to determine its value.
60. Financial Leverage #
The use of borrowed funds to increase the return on equity.
G #
G
61. General Ledger #
A complete record of a company's financial transactions, organized by account.
62. Gross Profit #
The difference between revenue and the cost of goods sold.
63. Goodwill #
The intangible value of a business, such as its reputation or customer loyalty.
64. GAAP (Generally Accepted Accounting Principles) #
A set of accounting standards and rules used in the United States.
65. Going Concern #
The assumption that a company will continue to operate indefinitely.
66. Gross Margin #
The percentage of revenue that exceeds the cost of goods sold.
67. Government Grants #
Funds provided by the government to support specific projects or activities.
68. Gain #
An increase in assets or decrease in liabilities resulting from transactions or events.
69. Goodwill Impairment #
A write-down of goodwill if its value decreases.
70. General and Administrative Expenses (G&A) #
Overhead costs not directly related to production or sales.
H #
H
71. Historical Cost #
The original cost of an asset when it was acquired.
72. Income Statement #
A financial statement that shows a company's revenues, expenses, and net income over a specific period.
73. Internal Controls #
Policies and procedures designed to safeguard a company's assets and ensure accurate financial reporting.
74. Investment Analysis #
The process of evaluating the potential return and risks of an investment.
75. Inventory #
The goods and materials held by a company for production or sale.
76. Interest Expense #
The cost of borrowing money, typically paid on loans or bonds.
77. Intangible Asset #
A non-physical asset with value, such as patents, trademarks, or goodwill.
78. Income Tax Expense #
The amount of taxes owed by a company based on its taxable income.
79. Internal Rate of Return (IRR) #
The discount rate that makes the net present value of an investment zero.
80. Income from Operations #
The profit generated from a company's core business activities.
I #
I
81. Investment #
The allocation of resources, such as money or time, in hopes of generating future returns.
82. Inventory Turnover #
The number of times inventory is sold and replaced in a given period.
83. Indirect Costs #
Costs that are not directly attributable to a specific product or project.
84. Interest Coverage Ratio #
A financial ratio that measures a company's ability to pay interest on its debt.
85. Income Tax #
A tax imposed on individuals and businesses based on their income.
86. Income Statement Analysis #
The process of analyzing a company's income statement to assess its profitability.
87. Internal Rate of Return #
The discount rate that makes the net present value of an investment zero.
88. Inventory Valuation #
The method used to assign a value to inventory on a company's balance sheet.
89. Investment Property #
Real estate or other assets held for investment purposes rather than for use in operations.
90. Income Tax Return #
A form filed with the government to report income and calculate taxes owed.
J #
J
91. Journal Entry #
A record of a financial transaction in a company's accounting system.
92. Joint Venture #
A business arrangement where two or more parties collaborate on a specific project or venture.
93. Job Costing #
A costing method that tracks the costs of a specific job or project.
94. Just #
in-Time (JIT) Inventory: A system of inventory management that aims to reduce waste by ordering goods only when needed.
95. Joint Cost #
The cost incurred in producing multiple products from a common input.
96. Journal #
A record of financial transactions in chronological order.
97. Job Order Costing #
A costing method used to track the costs of manufacturing custom or unique products.
98. Joint Product #
Two or more products that are produced simultaneously from a common input.
99. Job Cost Sheet #
A document that tracks the costs of a specific job or project.
100. Just #
in-Time Manufacturing: A production system that aims to minimize inventory and waste.
K #
K
101. Key Performance Indicators (KPIs) #
Quantifiable metrics used to measure a company's performance against its goals.
102. Knowledge Management #
The process of capturing, sharing, and leveraging knowledge within an organization.
103. Kanban #
A visual management tool used to track and manage work in progress.
104. Kaizen #
A philosophy of continuous improvement in processes and practices.
105. Key Account Management #
The practice of managing relationships with key customers to drive business growth.
106. Knowledge Transfer #
The process of sharing knowledge and expertise within an organization.
107. Kaizen Event #
A focused effort to implement improvements in a specific area or process.
108. Kanban System #
A visual system for managing workflow and inventory levels.
109. Key Performance Indicator #
A quantifiable metric used to evaluate the success of an organization or project.
110. Kickback #
An illegal payment made to someone in return for a favor or business opportunity.
L #
L
111. Labor Costs #
The expenses associated with paying employees for their work.
112. Liability #
A company's legal debts or obligations that arise during the course of business operations.
113. Liquidity #
The ability of a company to meet its short-term financial obligations.
114. Lease #
A contractual agreement where one party allows another to use an asset in exchange for periodic payments.
115. Loss #
The negative difference between revenues and expenses, resulting in a decrease in equity.
116. LIFO (Last In, First Out) #
An inventory valuation method where the last items purchased are the first to be sold.
117. Long #
Term Debt: Debt that matures in more than one year, typically used to finance large investments.
118. Leasehold Improvements #
Changes made to a leased property to meet the tenant's needs.
119. Leverage #
The use of borrowed funds to increase the return on equity.
120. Liquidation #
The process of selling off a company's assets to pay its debts.
M #
M
121. Managerial Accounting #
The branch of accounting that focuses on providing information for internal decision-making.
122. Markup #
The amount added to the cost of a product to determine its selling price.
123. Materiality #
The principle that financial information should be disclosed if it could influence the decisions of users.
124. Net Income #
The amount of money a company has left after deducting all expenses from its revenues.
125. Net Present Value (NPV) #
The difference between the present value of cash inflows and outflows of an investment.
126. Non #
Operating Income: Revenue generated from activities that are not part of a company's core business.
127. Operating Expenses #
The costs incurred in the day-to-day operations of a business.
128. Operating Income #
The profit generated from a company's core business activities.
129. Operating Lease #
A lease agreement that does not transfer ownership of the leased asset to the lessee.
130. Overhead Costs #
Indirect costs not directly attributable to a specific product or project.
N #
N
131. Net Worth #
The difference between a company's assets and liabilities, also known as equity.
132. Net Profit Margin #
The percentage of revenue that represents net income after all expenses have been deducted.
133. Net Present Value #
The difference between the present value of cash inflows and outflows of an investment.
134. Non #
Recurring Costs: Expenses that are not expected to occur regularly or repeatedly.
135. Net Loss #
The negative difference between revenues and expenses, resulting in a decrease in equity.
136. Non #
Operating Income: Revenue generated from activities that are not part of a company's core business.
137. Net Operating Income #
The profit generated from a company's core business activities.
138. Net Income #
The amount of money a company has left after deducting all expenses from its revenues.
139. Non #
Cash Expense: An expense that does not involve an actual cash outlay.
140. Non #
Operating Expense: An expense not directly related to a company's core business activities.
O #
O
141. Operating Income #
The profit generated from a company's core business activities.
142. Operating Budget #
A detailed plan that outlines expected revenues and expenses for a specific period.
143. Overhead Costs #
Indirect costs not directly attributable to a specific product or project.
144. Operating Expense #
The costs incurred in the day-to-day operations of a business.
145. Operating Cycle #
The time it takes for a company to purchase inventory, sell it, and collect cash from customers.
146. Operating Income Margin #
The percentage of revenue that represents operating income after deducting operating expenses.
147. Operating Cash Flow #
The amount of cash generated from a company's core business activities.
148. Opportunity Cost #
The potential benefit that is forgone when an alternative course of action is chosen.
149. Operating Lease #
A lease agreement that does not transfer ownership of the leased asset to the lessee.
P #
P
151. Profit #
The positive difference between revenues and expenses, resulting in an increase in equity.
152. Profit Margin #
The percentage of revenue that represents profit after deducting expenses.
153. Payroll Costs #
The expenses associated with paying employees, including wages, benefits, and taxes.
154. Property, Plant, and Equipment (PP&E) #
Tangible assets used in the production