Financial Terms A

Lessons

• Adjusted Gross Income (AGI) – Discover the meaning of Adjusted Gross Income AGI, learn how AGI is calculated, and understand its importance in determining taxable income, tax brackets, an...
• Annual Percentage Rate (APR) – APR is the total cost of borrowing money over a year, including the nominal interest rate and any additional fees or costs associated with the loan. Unlike s...
• Annuities – An annuity is essentially a contract between an individual and an insurance company. The individual makes a lump-sum payment or series of payments, and in re...
• Assets – Assets are broadly categorized into current assets, non-current assets, tangible assets, and intangible assets. Current assets include cash, accounts receiva...
• Asset Allocation – Asset allocation is the process of distributing investments across various asset classes to achieve diversification. Each asset class has different levels of...
• Asset-Backed Securities – An ABS is created when a financial institution bundles various income-generating assets and sells them to investors as a security. The cash flows from the un...
• Alternative Investments – Alternative investments are non-traditional financial assets that provide exposure to markets and strategies not typically correlated with conventional inves...
• Arbitrage – Arbitrage occurs when there is a discrepancy in the price of an asset across two or more markets. For example, if a stock is priced lower on one exchange tha...
• Accounting – Accounting involves tracking all financial activities, including revenue, expenses, assets, liabilities, and equity. The primary objective is to provide accu...
• Accounting Principles – Accounting principles are the foundational rules and guidelines that govern the practice of accounting. They ensure consistency, reliability, and transparenc...
• Accounting Methods – Accounting methods refer to the specific rules and procedures businesses use to record and report financial transactions. Choosing the right accounting metho...
• Accounts Payable – Accounts payable is a liability account on the balance sheet that tracks outstanding obligations to vendors. When a company purchases goods or services on cr...
• Accounts Receivable – Accounts Receivable AR represents the money owed to a business by its customers for goods or services delivered on credit. It is a crucial asset on the balan...
• Accrual Accounting – Accrual accounting is a method of recording financial transactions when they are earned or incurred, rather than when cash is exchanged. It is a widely used ...
• Accrued Expenses – Accrued expenses are liabilities representing expenses that a company has incurred but has not yet paid. They are recorded in the accounting period in which ...
• Accumulated Depreciation – Accumulated depreciation is a contra-asset account that offsets the cost of a fixed asset on the balance sheet. Instead of reducing the asset's historical co...
• Acquisition Cost – Acquisition cost refers to the total expense incurred by a company to acquire an asset, business, or investment. This cost includes the purchase price, taxes...
• Active Management – Active management focuses on selecting securities, timing market entries and exits, and adjusting asset allocations to achieve higher returns than a benchmar...
• Alpha – Alpha is a key performance metric in investing that measures an investment's return relative to a benchmark index. It indicates the value that a portfolio ma...
• Amortization – Amortization is the process of gradually paying off a debt or spreading the cost of an intangible asset over a specific period. It is a key accounting and fi...
• Amortizable Bond Premium – When investors purchase a bond, the price they pay may not always be equal to its face value, also known as par value. If a bond is purchased above par value...
• Audit – The main purpose of an audit is to provide assurance to stakeholders—such as investors, creditors, regulators, and management—that the financial statements a...
• Auditing and Auditors – Auditing can be described as the independent and systematic examination of financial statements, records, operations, or systems of an organization. The goal...
• Adjusted EBITDA – Adjusted EBITDA is a modified version of EBITDA that eliminates irregular, non-recurring, or non-operational expenses and incomes. While standard EBITDA remo...
• Accounts Payable Turnover Ratio – The Accounts Payable Turnover Ratio measures how many times a company pays its suppliers during a specific period, typically a year. It reflects the efficien...
• Assets Under Management (AUM) – Assets Under Management refers to the total market value of all the financial assets that an investment firm manages for its clients. These assets can includ...
• Adjusting Journal Entry – An adjusting journal entry is an entry made in a company’s general ledger at the end of an accounting period to reflect accrued or deferred items. Unlike reg...
• Asset Turnover Ratio – The Asset Turnover Ratio ATR calculates the revenue generated per unit of asset owned by a company. In simple terms, it shows how efficiently a company is us...
• Amortization Schedule – An amortization schedule is a comprehensive chart that outlines all future loan payments in chronological order. Each payment is divided into two main compon...
• Alternative Minimum Tax (AMT) – The Alternative Minimum Tax is a parallel tax system designed to ensure that taxpayers with substantial income cannot avoid paying taxes through loopholes an...