This labor is part of the cost of sales part of the

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Unformatted text preview: assets Long-term assets, also known as Plant and Equipment. Capital expenditure Spending on capital assets (also called plant and equipment, or fixed assets). Capital input New money being invested in the business. New capital will increase your cash, and will also increase the total amount of paid-in capital. Cash The bank balance, or checking account balance, or real cash in bills and coins. Collection days See Collection period, below. Collection period (days) The average number of days that pass between delivering an invoice and receiving the money. The formula is: =(Accounts_receivable_balance*360)/(Sales_on_credit*12) Commissions Gross margin multiplied by the commissions percentage. Commissions percent An assumed percentage used to calculate commissions expense as the product of this percentage multiplied by gross margin. Cost of sales The costs associated with producing the sales. In a standard manufacturing or distribution company, this is about the same as the cost of the goods sold. In a services company, this is more likely to be personnel costs for people delivering the service, or subcontracting costs. Current assets The same as short-term assets. Current debt Short-term debt, on terms of less than five years, e.g. credit cards. Current liabilities Debts; money that must be paid. Usually debt on terms of less than five years. D Debt and equity The sum of liabilities and capital. This should always be equal to total assets. Depreciation An accounting and tax concept used to estimate the loss of value of assets over time. For example, cars depreciate with use. Directory A computer term related to the operating system on IBM and compatible computers. Disk storage space is divided into directories. Dividends Money distributed to the owners of a business as profits. GLOSSARY G.3 E Earnings Also called income or profits, earnings are the famous “bottom line”: sales less costs of sales and expenses. EBIT Earnings before interest and taxes. Equity Business...
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