Forget Financial Jargon. Let's Do a 5 Year Old ABC Sing Along

Read Time: 2 Minutes

Forget everything you know about financial jargon. Rewriting the rulebook like a 5 year old sing along...

Let's turn financial statements into a catchy tune for all ages!

Assets: 🧸Things you own, like toys

Balance sheet: 📝 List of things you own and what you borrowed

Cash flow: 💰Shows how cash comes in and out. What others paid you, and what you paid others

Depreciation: 🕰️It’s like when your toy gets old and doesn’t work as well. This shows how much $ it lost

EBITDA: 🍋Money a lemonade stand made before paying for the money you pay your parents for borrowing their money, how much value your table lost, and taxes you pay to the government

Financial statements: 📖They’re like pages of a book that show how well your lemonade stand is doing. How much it made and spent, what it owns and borrowed

GAAP: 🎲Following the rules when you play a game with accountants

Historical cost: 💵If you bought a toy for $5, it won’t change even if the toy becomes worth more or less later

Income statement: 📊A recipe that shows how much money a lemonade stand made and spent over a certain time

Journal entries: 📔writing in a diary about what you bought and sold

KPI: 🏆Scoreboard in a game – shows how well your business is doing.

Liabilities: 🤝When you borrow a toy from a friend and promise to return it

Materiality: 🧩 Will something new that you learn change which toy you choose to buy?

Net income: 💸Counting your allowance after you’ve spent some money on toys

Owner’s equity: 🏠Your own money used to start your lemonade stand, and all the money you made from it over the years and kept without buying toys

Profit: 🎉Having money to buy toys after selling lemonade

Quick ratio: 📈See if you have enough juice to sell and pay your friend back right away for borrowing his lemonade stand table

Revenue: 💳Money that people pay you from selling lemonade

Shareholders: 👨‍👩‍👧‍👦People who own a piece of a big toy store

Taxes: 📝It’s like giving some of your allowance to your parents. It’s money businesses have to pay the government

Unearned revenue: 💡Someone pays you for lemonade they’ll get next week

Valuation: 💎How much your toys are worth if someone wants to buy them

Working capital: 💼Having enough money to buy more toys for your lemonade stand

eXpenses: 💰Spending your allowance on toys or snacks

Yield: 🍋Counting how many lemons you got from your lemon tree

Zero based budgeting: 📊Imagine starting each week with no toys and deciding which ones to buy

Let's make finance fun again! 🌟 Drop a comment if you're ready to learn!

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