Glossary Terms:

Business Ownership: How Sweet It Can Be!

Glossary terms from:
http://www.econedlink.org/e533


Bank

A financial institution that provides various products and services to its customers, including checking and savings accounts, loans and currency exchange.

Borrow

To receive and use something belonging to somebody else, with the intention of returning or repaying it--often with interest in the case of borrowed money.

Business

Any activity or organization that produces or exchanges goods or services for a profit.

Capital

Resources and goods made and used to produce other goods and services. Examples include buildings, machinery, tools and equipment. In the context of credit transactions, capital is one of the Three Cs of Credit. It is an indicator of how creditworthy a prospective borrower is likely to be as determined by the borrower's current financial assets and net worth.

Consumption

Spending by households on goods and services. The process of buying and using goods and services.

Corporation

A legal entity owned by shareholders whose liability for the firm's losses is limited to the value of the stock they own.

Costs

An amount that must be paid or spent to buy or obtain something. The effort, loss or sacrifice necessary to achieve or obtain something.

Credit

The opportunity to borrow money or to receive goods or services in return for a promise to pay later.

Debt

Money owed to someone else. Also the state or condition of owing money. Can be individual, corporate or government debt.

Decision

A conclusion reached after considering alternatives and their results.

Deductible

Regarding insurance policies: A set amount an insured person must pay per loss before the insurance company will pay a claim.

Demand

The quantity of a good or service that buyers are willing and able to buy at all possible prices during a period of time.

Diversify

To invest in a variety of stocks, bonds, money market accounts, etc., in order to spread risk.

Entrepreneur

One who draws upon his or her skills and initiative to launch a new business venture with the aim of making a profit. Often a risk-taker, inclined to see opportunity when others do not.

Exchange

Trading a good or service for another good or service, or for money.

Expenses

Payments for goods and services.

Goods

Tangible objects that satisfy economic wants.

Incentive

Any reward or benefit, such as money, advantage or good feeling, that motivates people to do something.

Income

Payments earned by households for selling or renting their productive resources. May include salaries, wages, interest and dividends.

Income Tax

Payments made by individuals and corporations to the federal government (and to some state and local governments) based on income received (both earned and unearned).

Insurance

A practice or arrangement whereby a company provides a guarantee of compensation for specified forms of loss, damage, injury or death. People obtain such guarantees by buying insurance policies, for which they pay premiums. The process allows for the spreading out of risk over a pool of insurance policyholders, with the expectation that only a few policholders will actually experience losses for which claims must be made. Types of insurance include automobile, health, renter's, homeowner's, disability and life.

Investment

The purchase of capital goods (including machinery, technology or new buildings) that are used to produce goods and services. In personal finance, the amount of money invested in stocks, bonds, mutual funds and other investment instruments.

Job

A piece of work usually done on order at an agreed-upon rate. Also a paid position of regular employment.

Liability

Legal responsibility to pay for damages or losses one has caused.

Markets

Places, institutions or technological arrangements where or by means of which goods or services are exchanged. Also, the set of all sale and purchase transactions that affect the price of some good or service.

Money

Anything that is generally accepted as final payment for goods and services; serves as a medium of exchange, a store of value and a standard of value. Characteristics of money are portability, stability in value, uniformity, durability and acceptance.

Partnership

A business with two or more owners who share the firm's profits and losses.

Product

A good or service that can be used to satisfy a want.

Production

A process of manufacturing, growing, designing, or otherwise using productive resources to create goods or services used to to satisfy a want.

Profit

Income received for entrepreneurial skills and risk taking, calculated by subtracting all of a firm's explicit and implicit costs from its total revenues.

Resources

The basic kinds of resources used to produce goods and services: land or natural resources, human resources (including labor and entrepreneurship), and capital.

Risk

The chance of losing money.

Sale

An exchange of goods or services for money.

Services

Activities performed by people, firms or government agencies to satisfy economic wants.

Sole Proprietorship

A business owned by one person who receives all the profits and is responsible for all the debts incurred by the business.

Stock

An ownership share or shares of ownership in a corporation.

Supply

The amount of a good or service that producers are willing and able to offer for sale at each possible price during a given period of time.

Wants

Desires that can be satisfied by consuming or using a good or service. Economists do not differentiate between wants and needs.

Work

Effort applied to achieve a purpose or result, often for pay; skills and knowledge put to use to get something done; employment at a job or in a position; occupation, profession, business, trade, craft, etc.