Jump Start Micro-Enterprise Key Financial Concepts/Credit Application Flashcards

Something of value. Anything you own is an asset. Assets can be something big (like a house) or something small (like a piece of jewelry).

Money that you are paid when you sell something. Example: the real estate agent who sells you a house is paid 2% commission on the price of the house sold.

A person or business with a strong credit score and the liquid financial resources that make it likely they will be able to repay any loan.

Money paid by a company to a shareholder. Dividends are optional - many companies do not pay dividends. Dividends are typically paid every three months (which is called a "quarter, " since three months is a quarter of a year) or annually.

Debt you owe someone that is paid in monthly events. Examples: your car or truck payment, your credit cards and your mortgage are all paid in monthly installment payments.

An obligation you have to pay someone else money. Also called a debt or loan.

Assets that can be quickly turned into cash.

The date a loan (or debt or liability) is due. Example: the maturity of your car loan is 5 years from the day you buy the car - 5 years from now that debt needs to be completely repaid.

The money a person borrows to buy real estate. Example: when you buy a house you go to the bank to get a mortgage.

The date a loan (or debt or liability) is due. Example: you get $1,000 a month for renting a house you own to a friend. The costs of maintaining the house every month equal $800. That means your "net income" from renting that house to your friend is: $1,000 - $800 = $200 per month (before taxes).

Other types of debt (or money you woe someone else) other than a mortgage: Example: if you borrowed money to buy a boat, then the money you borrowed is a note payable to the person or company that sold you the boat.

An investment worth money; a "financial instrument" indicating ownership. Securities are financial assets, pieces of paper that represent ownership and are valuable. Example: like Apple or McDonald's stocks that are traded in the stock market is a security.

An individual or company that owns shares in a company.

Cash, publicly traded stocks, government bonds or corporate bonds. All can be turned into cash quickly.

A person or company with sufficient liquidity who guarantees to repay a loan if a company cannot.