Business Law Terms and Definitions

Accountant's Opinion If a independent certified public accountant is requested to audit a company's books, he will issue a opinion as to the condition of the financial statements. There are several degrees of opinion from clean to adverse. Current liabilities Current liabilities debts that must be repaid in one year or less. Accounting Rate of Return A method of computing the profitability where the total cash inflow over the life of the project is reduced by expenses. Collateral Assets pledged by the borrower to get a loan. Target market Target market the specific individuals that you have selected to sell to. Accrual Accounting Under this method of accounting, income is recognized when earned, whether or not collected, and expenses are recognized when events have occurred that determine that a liability exists and the amount of the liability can be ascertained with reasonable accuracy. Equity Partnership A limited partnership arrangement for providing start-up and seed capital to businesses. Liabilities Liabilities the debts owed by the business. The state of being financially obligated to creditors. Equity investment Equity investment the cash that business owners invest in the business. Controllable expenses Those costs that can be managed by the owner and either incurred or not, depending on the owner's needs.

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	Did You Know?
	Annual Budgets are a component in small business For an existing business, this is a realistic budget for the current fiscal year based on past income and expenditures. It includes anticipated changes in income and spending that may occur during the year. For a start-up business, this is a realistic projection of the income and costs of doing business for a year.