Long Term Mindset

Income Statement Synonyms Income Statements don't have a universal look or layout. That's because management teams have full control over the terms & layout of their financial statements. Here are the other words that management teams can use when creating their Income Statement: INCOME STATEMENT SYNONYMS: →Revenue Statement →Earnings Statement →Operating Statement →Statement of Earnings →Statement of Operations →Profit and Loss Statement (P&L) REVENUE SYNONYMS: →Sales →Income →Top Line →Receipts →Turnover →Gross Sales →Gross Income COST OF GOODS SOLD SYNONYMS: →Goods Cost →Direct Costs →Cost of Sales →Cost of Revenue →Cost of Products Sold GROSS PROFIT SYNONYMS: →Sales Profit →Gross Margin →Gross Income →Gross Earnings OPERATING EXPENSES SYNONYMS: →Overhead →Operating Costs →Operating Outgo →Sales & Marketing →Business Expenses →Operational Expenses →General & Administrative →Research & Development →Selling, General, and Administrative Expenses (SG&A) OPERATING INCOME SYNONYMS: →Operating Profit →Business Income →Operating Margin →Operating Earnings →Operating Cash Flow →Earnings Before Interest and Taxes (EBIT) PRE-TAX PROFIT SYNONYMS: →Pretax Profit →Pretax Earnings →Income Before Tax →Profit Before Tax (PBT) →Earnings Before Tax (EBT) →Operating Profit Before Tax →Earnings Before Income Taxes (EBIT) INCOME TAX SYNONYMS: →Direct Tax →Revenue Tax →Earnings Tax →Tax on Income →Corporate Income Tax →Fiscal Charge on Income EARNINGS SYNONYMS: →Profits →Income →Earnings →Net Profit →Bottom Line →Net Earnings →Profit After Tax (PAT) →Net Income After Taxes →Earnings After Tax (EAT) →Net Income Before Extraordinary Items SHARES OUTSTANDING SYNONYMS: →Issued Shares →Outstanding Stock →Outstanding Equity →Basic Shares Outsanding →Diluted Shares Outstanding →Outstanding Shares of Stock →Fully Diluted Shares Outstanding EARNINGS PER SHARE SYNONYMS: →EPS →Profit Per Share →Net Income Per Share Did I miss anything? Let me know in the comments section below! *** ➕ Follow Long Term Mindset for more content like this. Want to master the basics of accounting (for free)? Enroll in our email-based course: Financial Statements School Get started here (It's free) → https://lnkd.in/eKbRV7g6 If this post was helpful, repost it ♻️ to share with your audience.

FUNDAMENTALS OF ACCOUNTING ⚖ WHAT: Accounting is the procedure of data entry and recording, summarizing, analyzing, and reporting the financial data. FIVE BASIC ACCOUNTING PRINCIPLES: 1: Revenue Recognition: → Revenue is recorded at the time of the transaction. 2: Matching Principle: → Assets are recorded at their acquisition cost. 3: Historical Cost: → Fiscal Year Income is compared with Calendar Year Expense. 4: Full Disclosure: → Full disclosure of all relevant info is made available. 5: Objectivity Principle: → Information in books should be true, relevant, & accurate. 5 CATEGORIES OF ACCOUNTING: 1: Assets: → All Tangible & Intangible items owned by the company. 2: Liabilities: → Amounts the company owes to others. 3: Equity: → Net Worth of Entity: Assets - Liabilities 4: Expenses: → Amount paid purchases made in business. 5: Income: → Amount earned by the company from the sale of goods. JOURNAL VS LEDGER: →Journal Entries consist of Debits & Credits, the totals of which should be equal →Journal are then transferred to the appropriate Ledger Accounts FINANCIAL STATEMENTS: 1: Income Statement: → Shows profit or loss during the period. 2: Balance Sheet: → A company's assets, liabilities, and equity at a point in time. 3: Statement of Cash Flow: → Shows the inflow and outflow of cash during the period. DOUBLE ENTRY SYSTEM → Each Accounting Entry will have two sides - Debit and Credit. → The accounts used will be from any of the five categories of accounting. THREE FIELDS OF ACCOUNTING: → Financial Accounting: Preparing the Financial Statements. → Managerial Accounting: Prepare reports for internal use. → Cost Accounting: Measure the performance of resources. TYPES OF ACCOUNTS: → Real: Consists of tangible and intangible assets. → Personal: Accounts for individuals, groups, entities, banks, etc. → Nominal: Accounts related to Gain, Loss, Expense & Income. What did I miss? Let me know below! *** ➕ Follow Long Term Mindset for more content like this. Want to master the basics of accounting (for free)? Enroll in our email-based course: Financial Statements School Get started here (It's free) → https://lnkd.in/eKbRV7g6 If this post was helpful, repost it ♻️ to share with your audience.

20 important finance terms by Nevena Miskovic - Go and follow her! ROI Profit Assets Equity Budget Capital Revenue Leverage Expenses Liquidity Solvency Dividends Cash Flow Interest Rate Liabilities Depreciation Amortization Balance Sheet Income Statement Risk Management Follow Long Term Mindset for more content like this. *** P.S. Want to master the basics of accounting (for free)? I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English. Check it out here (It's free) → https://lnkd.in/eKbRV7g6 If you found this post useful, please repost ♻️ to share with your audience

Debt vs Equity Which should you use to fund your business? Here's what you need to know: ➡️ What is debt? Debt is money lent by creditors who will eventually be paid back with interest. Since it needs to be paid back, it is found in the "Liability" section of the Balance Sheet. Common types of Debt: →Long-Term Debt →Convertible Notes →Line of Credit ➡️ What is equity? Equity is money given to the company by investors in exchange for ownership of the company. Since it does not need to be paid back, it is found in the "Equity" section of the Balance Sheet. Common types of Debt: →Common Stock →Preferred Stock ➡️ What are the pros of issuing debt? →You don't need to give up ownership →You know how much you need to pay back ➡️ What are the cons of issuing debt? →Can be expensive →Debt holders are paid on a rigid schedule →Can lead to bankruptcy ➡️ What are the pros of issuing equity? →You don't have to pay the money back →Aligns the company’s interests with investors ➡️ What are the cons of issuing equity? →Expensive way to raise capital if the business succeeds →If too much equity is sold, the founders can lose control of the company ➡️ When should you issue debt vs issue equity? Debt is a good choice when the business model is proven, equity valuations are low, and interest rates are low. Equity is a good choice when the business model hasn't been proven, valuations are high, and you want to align your interests with investors. What would you add? *** ➕ Follow Long Term Mindset for more content like this. Want to master the basics of accounting (for free)? Enroll in our email-based course: Financial Statements School Get started here (It's free) → https://lnkd.in/eKbRV7g6 If this post was helpful, repost it ♻️ to share with your audience.

Cash-based accounting is simpler than accrual-based accounting. Post by: Gary Jain 🚀 Accrual-based accounting is only for large companies. And what not. These are the most common MYTHS I have heard in the accounting world! The choice between both concepts depends on these 5 important factors: ▶️ Business size ▶️ Tax implications ▶️ Reporting requirements ▶️ Complexity of transactions ▶️ Type of transactions (cash or credit) Let’s understand them from scratch! 📍 Meaning: Cash-based accounting → Method of recording financial transactions based on when cash is received or paid. Accrual-based accounting → Method of accounting that records transactions when they occur, regardless of when cash changes hands. 📍 Significance: 🔸 Cash-based accounting: - Provides clarity on day-to-day cash management. - Easy for small businesses with straightforward transactions. - Can reduce taxable income by reporting revenue when received. 🔸 Accrual-based accounting: - Offers a precise financial picture by matching revenues and expenses. - Enhances credibility, attracting investors and creditors. - Enables effective long-term planning and budgeting. Back to your question: 🔸 Which one is better? The decision between cash-based accounting and accrual-based accounting depends on the state of your business. For reporting purposes, accrual-based accounting will usually provide better financial intelligence on the true state of your business However, cash-based accounting may be more suitable for businesses with simple transactions and a lot of cash transactions Want to know the difference between both the accounting systems? Below is the ultimate guide you need to clear all your doubts! Grab it. Save it. Implement it! . . Please note that the choice between cash-based and accrual-based accounting depends on various factors. Many businesses use accrual accounting for external reporting while using cash accounting for internal management purposes. Found useful? Repost this and let’s take it to other business owners too Who needs to know this! Follow Long Term Mindset for more content like this. *** P.S. Want to master the basics of accounting (for free)? I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English. Check it out here (It's free) → https://lnkd.in/eKbRV7g6 If you found this post useful, please repost ♻️ to share with your audience

Assets Explained Simply: Assets are any resource owned by a company that can be used to produce economic value. Assets are ordered by LIQUIDITY, which is the speed at which they can be converted into cash. There are two main categories of assets: • CURRENT ASSETS: are expected to be used within one year. • LONG-TERM ASSETS: have a useful life of more than 1 year. Management teams have complete control over the categories that they use, but here are some of the more popular ways that assets are categories: CURRENT ASSETS 💴 CASH & CASH EQUIVALENTS What: Cash / T-bills / CDs <3 Month Maturity Kind of Like: Your Checking Accounting MARKETABLE SECURITIES What: Liquid Equity / Bonds Expected To Be Used In <1 Year Kind of Like: CDs that mature in <1 year ACCOUNTS RECEIVABLE: What: Money That Is Owed By Customers Kind of Like: You paid for a friend's dinner, and they owe you money INVENTORY: What: Raw Materials & Finished Goods Available For Sale Kind of Like: Unsold items in a personal Etsy store OTHER CURRENT ASSETS: What: A Catch-All Category Of Assets Expected To Last <1 Year Kind of Like: Homeowners insurance, car insurance, health insurance LONG-TERM ASSETS 💴 LONG-TERM INVESTMENTS What: Investments The Company Intends To Hold For >1 Year Kind of Like: Your Retirement Fund FIXED ASSETS: What: Land / Machinery / Equipment / Buildings / Durable Assets Kind of Like: Your house or car GOODWILL: What: Premiums Paid To Acquire Other Businesses Kind of Like: Your reputation OTHER LONG-TERM ASSETS: What: Catch-All Category Of Assets Expected to Last >1 Year Kind of Like: A diploma or advanced Degree What other common categories of assets do you see? *** ➕ Follow Long Term Mindset for more content like this. Want to master the basics of accounting (for free)? Enroll in our email-based course: Financial Statements School Get started here (It's free) → https://lnkd.in/eKbRV7g6 If this post was helpful, repost it ♻️ to share with your audience.

Finance Mega Cheat Sheet By Pieter Slegers - Give him a follow! A full Investing Book in one page • How to Analyze a Balance Sheet • How to Analyze an Income Statement • How to Analyze a Cash Flow Statement • Balance Sheet Ratios • Profitability Ratios • Cash Flow Ratios • Valuation Ratios • Capital Allocation • Capital Allocation Metrics • Capital Allocation Options      Follow Long Term Mindset for more content like this.      ***      P.S. Want to master the basics of accounting (for free)?      I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English.      Check it out here (It's free) → https://lnkd.in/eKbRV7g6         If you found this post useful, please repost ♻️ to share with your audience

Cash vs. Non-Cash Expenses 💴 What's the difference? In business, expenses can be categorized into two major buckets: Cash & Non-Cash. Here's the difference: Definitions: → Cash Expenses: Actual cash is paid out. → Non-Cash Expenses: Recorded expenses without actual cash outflow. Examples: → Cash Expenses: Buying raw materials, paying wages, utility bills. → Non-Cash Expenses: Depreciation, amortization, stock-based compensation. Accounting Treatment: → Cash Expenses: Recorded as an expense on the Income Statement & Cash Flow Statement when incurred, impacting cash and expense accounts. → Non-Cash Expenses: Recorded as an expense on the Income Statement, but no actual cash changes hands. Impact on Cash Flow: → Cash Expenses: Directly impacts cash flow due to cash outflow. → Non-Cash Expenses: No direct impact on cash flow. COMMON NON-CASH EXPENSES: Depreciation & Amortization: Spreads the cost of tangible/intangible assets over their lives. 📉 Impact: Lowers profit, no direct cash impact. Stock-Based Compensation: Expenses from equity granted to employees. 📉 Impact: Increases expenses, reducing profit, no cash impact. Impairment Charges: Asset write-downs when market value dips below book value. 📉 Impact: One-time expense hit, no immediate cash impact. Depletion: Cost allocation for consumed natural resources. 📉 Impact: Reduces profit, no cash impact. Unrealized Gains/Losses: Changes in value of unsold investments. 📈📉 Impact: Can swing profit either way, no cash impact until sold. Provisions for Doubtful Debts: Reserving for expected bad debts. 📉 Impact: Increases expenses, no cash impact. Deferred Income Taxes: Income taxes recorded but deferred. 📉 Impact: May reduce current taxable income, no immediate cash impact. Non-Cash Charitable Contributions & In-Kind Contributions: Donations in non-cash forms. 📉 Impact: Raises expenses, no cash outflow. Was this helpful? Is anything confusing? Let me know below! *** ➕ Follow Long Term Mindset for more content like this. Want to master the basics of accounting (for free)? Enroll in our email-based course: Financial Statements School Get started here (It's free) → https://lnkd.in/eKbRV7g6 If this post was helpful, repost it ♻️ to share with your audience.

CEO vs CFO vs COO Credit to: Nicolas Boucher follow him! What are the difference in their roles? Knowing what the management does is going to help you in your career. Let's discover together what they do: 1. Their Main Leadership Roles CEO leads the company CFO manages finances COO oversees the day-to-day operations. 2. On Strategic Vision CEO drives strategy, growth, and innovation CFO ensures stability and establishes discipline COO implements the strategic initiatives 3. What Are Their Stakeholder Relations? CEO represents the company to stakeholders and is the public face CFO reports financials to the board and shareholders COO liaises between different departments to ensure smooth execution 4. Their impact on Company's Values & Benchmarks CEO sets corporate values CFO sets financial benchmarks COO ensures operational processes align with these values 5. Their Role in the Market Strategy CEO drives global expansion CFO optimizes existing markets COO manages operational aspects of market penetration 6. What is their Client Focus? CEO focuses on client acquisition CFO focuses on client retention COO enhances service delivery to facilitate both 7. Their Involvement with Risk Management CEO sets the company's risk appetite, CFO manages risk, and COO mitigates operational risks. 8. Their Relation to the Brand CEO develops the brand CFO tracks the performance COO optimizes operational efficiency to uphold the brand promise 9. Their Role on Investments CEO determines investment strategy CFO manages investment portfolios COO allocates resources to meet strategic objectives. 10. Their Involvement in the Product Lifecycle CEO drives product development CFO monitors product profitability COO coordinates product manufacturing and delivery Follow Long Term Mindset for more content like this. *** P.S. Want to master the basics of accounting (for free)? I created a 5-day, email-based course that explains the Balance Sheet, Income Statement, and Cash Flow Statement in plain English. Check it out here (It's free) → https://lnkd.in/eKbRV7g6 If you found this post useful, please repost ♻️ to share with your audience

The Investing Risk Pyramid The classic definition of risk is measured in volatility, which is how much and how quickly the value of an investment can change. According to this definition of risk, here's how various assets stack up: HIGHER RISK - Futures - Options - Unprofitable stocks - Junk bonds - Commodities - Crypto - Precious Metals MEDIUM RISK - Growth stocks - Small company stocks - Medium-rated bonds - Mutual funds - Rental real estate LOW RISK - Blue chip stocks - Investment grade bonds - US Treasury bonds and notes LOWEST RISK - Savings accounts - Money market funds - CDs - US Treasury bills Fixed annuities With that said, here are two quote about risk that everyone should keep in mind. "Risk comes from not knowing what you're doing." -- Warren Buffett "The biggest, least mentioned risk of all -- is not taking enough risk." -- David Gardner Do you think volatility is a good measure of risk? *** ➕ Follow Long Term Mindset for more content like this. Want to master the basics of accounting (for free)? Enroll in our email-based course: Financial Statements School Get started here (It's free) → https://lnkd.in/eKbRV7g6 If this post was helpful, repost it ♻️ to share with your audience.