Page 6 - CBS Client Handbook

Glossary of Terms…

Entrepreneurs ​go into business​ with a variety of pre-existing skills. Some are natural salespeople, while
others have the ability to come up with ideas that sell themselves. But while there may be a handful of
entrepreneurs who are truly financially savvy, the majority cringe at the thought of preparing financial
statements and managing the books of their small business.

Business owners who struggle with finances should definitely hire an accountant, or utilize ​accounting
software​ to make things easier. However, while it may be wisest to depend on expert help when it comes
to the nitty gritty, it’s still important to have at least a basic understanding of the inner workings of your
company’s finances.

As such, there are some basic financial terms every entrepreneur should know as their business grows.
These terms may come up in meetings with potential investors, partners, and clients, so it’s important to
be aware of them and to understand how they might affect your business.

Assets

Assets - ​First on the list of financial terms, assets are the economic resources a business has. In a broad
sense, assets include everything your company owns that has some economic value. These are generally
broken down into six different types of assets.

Current Assets ​- In this asset class, you would include things that can be easily converted into cash.
Examples of assets in this category include stock holdings, inventory, short-term investments, marketable
securities, fixed deposits, the balance in your business’s checking and savings accounts, bills receivable,
and prepaid expenses. Because this type of asset can be quickly turned into cash, it’s also often termed
“liquid assets.”

Fixed assets​ - ​Also known as long-term assets or non-current assets, these are things that are of a fixed
nature because they cannot be easily converted into cash and often require complex procedures and a
significant amount of time before you can have their cash value in hand. For instance, fixed assets would
encompass things like land, real estate, machinery and equipment, and furniture.

Tangible assets -​ ​As the name implies, tangible assets are those assets that you can see and touch. This
can include items that may also be referred to as current or fixed assets. For instance, cash — a current
asset — is a tangible asset because it’s something you can physically touch. Most fixed assets are also
tangible assets for the same reason. Land, real estate, machinery, equipment, and furniture are, after all,
things you can see and touch.

Intangible assets ​- ​These are the opposite of tangible assets, and include any assets that are, well, not
tangible. Examples of intangible assets include things like franchise agreements, patents, brands,
trademarks, and copyrights.

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