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moneygirl Glossary ~ ABC

Submitted by on January 14, 2011 – 6:49 pmNo Comment

The ABC’s of Money

Accounts payable: Money owed to suppliers.

Accounts receivable: Money owed by customers.

Amortization: The repayment of a loan through installments.

Annual Percentage Rate (APR): The interest rate that a bank pays over one year.

Annual report: A yearly record / report of a publicly held company’s financial condition.

Appreciation: An increase in the value of an asset.

Asset: Any possession that has value in an exchange.

Asset classes: Categories of assets, such as stocks, bonds, real estate.

Aunt Millie: Someone who doesn’t know how to handle money.

Bad debt: Any debt that is written off and deemed uncollectible.

Back taxes: Due taxes that have not been paid on time.

Balance: The total amount of principal and interest in your account; for a credit card account, it is the unpaid principal and interest.

Bank run: A series of unexpected cash withdrawals from a bank caused by a sudden decline in depositor confidence. It is panic.

Barter: Trade of goods or services without using money.

Bear market: Any market where prices are declining for a prolonged period, usually falling 20% or more.

Beneficiary: A person who receives the benefit of a trust or proceeds of a life insurance policy.

Bill: A statement or written list indicating the amount of money that is to be paid to a person or a business for a service or for purchasing a product.

Black market: An illegal market.

Bond: These are certificates sold by companies or the government in order to raise money. Bonds are debt, typically issued for more than a year. When you buy a bond, you are lending money. The seller agrees to pay the principal amount of the loan at a specified time.

Borrow: To take money from someone to use in the present, with the promise of paying it back sometime in the future.

Bounced Cheque: A cheque that the bank returns to the payee (the person to whom money is being paid); it is returned unpaid because the account did not contain enough money to cover it.

Budget: A plan that will help keep track of how much money will be earned and spent during a certain period of time.

Bull market: A market in which prices are on an upward trend.

CFO: Chief Financial Officer is the officer in a company responsible for handling the financial affairs.

Capital: Money invested (usually in a company).

Capital asset: An asset held over the long term, such as land or a building.

Caveat emptor: Latin expression, meaning “Buyer beware”.

Certified cheque: A cheque which has been guaranteed by a bank, for which funds can be immediately withdrawn.

Cheque: A bill of exchange which represents a draft on a bank. It promises to pay a certain sum of money to a person or party.

Collateral: Collateral is a borrower’s pledge of a specific property to a lender, used to secure repayment of a loan.

Compound interest: Interest paid on previously earned interest, as well as on the principal.

Conglomerate: A company involved in two or more unrelated businesses.

Consignment: The transfer of goods to a seller while title to the merchandise remains with the owner.

Consumer goods: Goods bought for personal or household use such as food, clothing or entertainment.

Contract: A verbal or written agreement between two people or parties that describes what will be done, how much will be paid, and the date it will be done by. Two key components of a contract are the offer and acceptance.

Credit: The ability to borrow money.

Creditor: A person or organization that you owe money to. If you have a loan, then the creditor is the bank.

Credit Card: A plastic card that can be used to make purchases on credit. The issuer of the card is usually a bank or credit card company, and they have agreed to lend the cardholder a certain amount of money over time. The person is expected to pay back the amount borrowed each month.

Currency: Money.

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