Pusaram

Glossary

Short definitions of the terms used in our lessons.

Accrual accounting
Recording income and costs when earned or incurred, not when cash moves.
Amortisation
Spreading a loan's repayment over time so each instalment covers interest and some principal.
Arrears
Payments that are overdue.
Asset
Something of value that you own or are owed.
Balance sheet
A snapshot of assets, liabilities and equity on one date.
Break-even
The sales volume where revenue equals total costs.
Buffer
Money kept to smooth income swings or cover surprises.
Cash flow
Money moving in and out over a period.
Compounding
Earning interest on interest already earned.
Credit (tax)
An amount that reduces the tax itself.
Deduction
An amount subtracted from income before tax is calculated.
Diversification
Spreading money across different assets so you depend less on any one.
Effective rate
The yearly rate you truly pay once the way interest is charged and compounded is taken into account.
EMI
Equated monthly instalment: the fixed monthly payment on a reducing-balance loan.
Equity
Assets minus liabilities: the owner's stake.
Fixed cost
A cost that does not change with volume.
Flat rate
Interest charged on the original amount for the whole term.
Future value
What an amount grows to after some time at some rate.
Inflation
A general rise in prices over time.
Interest
The price of using someone else's money.
Liability
Something you owe.
Liquidity
How easily something turns into cash without losing value.
Marginal tax rate
The rate on the next unit of income.
Maturity
The date a debt or deposit is repaid.
Nominal rate
A rate stated before adjusting for inflation.
OTP
One-time passcode. Never share it.
Overdraft
Spending more than an account holds, usually with charges.
Phishing
A fake message meant to steal your details.
Policy rate
The central bank's key rate guiding short-term rates.
Premium
The price paid for insurance cover.
Present value
What a future amount is worth today.
Principal
The original amount borrowed or saved.
Real rate
A rate after adjusting for inflation.
Reducing-balance rate
Interest charged only on the amount still owed.
Sinking fund
Money set aside regularly for a known future cost.
Time horizon
How long until you need the money.
Treasury bill
Short-term government debt sold at a discount.
Variable cost
A cost that changes with each unit sold.
Working capital
Short-term assets minus short-term liabilities.