- Accounting
- The system a business uses to record, organize, and check every dollar in and out, so it always knows exactly where it stands.
- Bookkeeping
- The recording half of accounting: writing down every transaction as it happens. (Reading the gauges — before anyone steers.).
- Financial management
- Using the recorded numbers to make decisions: what to charge, what to cut, when it's safe to grow. (The steering.).
- Cost of Goods Sold (COGS)
- The direct cost of the actual products you sold — the materials and making of the thing itself, and nothing else. If you didn't make the sale, you wouldn't have spent it.
- Operating expenses (opex)
- Everything else it takes to keep the business running — rent, ads, software, wages, insurance. Owed even in a week with zero sales.
- Fixed cost
- A cost that stays the same no matter how much you sell (rent, a subscription, a loan payment). A weight you carry every month.
- Variable cost
- A cost that rises and falls with how much you sell (materials, per-unit supplies, shipping). At zero sales, it drops to almost nothing.
- Gross profit
- Revenue minus COGS. Shows whether the product itself is priced above what it costs to make.
- Net income
- The true bottom line: what's left after all expenses, including operating expenses. Shows whether the whole business made money.
- Contribution margin
- Price minus variable cost per unit — the leftover from each sale that goes toward covering fixed costs. Bigger margin, faster you reach profit.
- Break-even point
- The number of units you must sell to cover your fixed costs (fixed costs / contribution margin). The sale after break-even is your first real profit.
- Financial capital
- The money a business raises to start up or grow, before it has earned enough on its own — the fuel it needs up front.
- Equity financing
- Raising money by selling part-ownership of the business. No repayment, and the investor shares the risk — but you give up a permanent slice of ownership and profit. (At market scale: issuing stock.).
- Debt financing
- Raising money by borrowing, with a promise to repay it plus interest on a schedule. You keep 100% ownership, but owe the payment whether sales come or not. (At market scale: issuing bonds.).
- Dilution
- When bringing in new owners shrinks the slice each existing owner holds — the pie gets cut into more, thinner pieces.
- Interest
- The extra a borrower pays a lender for the use of their money — the price of debt.
- Financial reporting
- Sharing a business's real numbers (its three statements) with the people who rely on them: investors, lenders, and the government. A report is a promise the numbers are true.
- Audit
- An independent check by outside accountants to confirm a company's numbers are honest — a guardrail that protects the promise.
- Accounting fraud
- Deliberately faking the numbers to make a business look better (or worse) than it really is — lying on the report everyone is trusting. It is fraud aimed at investors.
