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Kurums Decoded: business and corporate terms explained for Gen Z in plain, pop-culture English. Corporate, translated.
Deferred revenue is money a business has received from customers for goods or services it has not yet delivered. Because the company still owes the customer that delivery, the money is recorded as a liability on the balance sheet, then moved into revenue gradually as the work is done or the product is provided.
Cost of goods sold, or COGS, is the direct cost of producing or buying the products a business sold in a period. It includes materials, the stock bought for resale and often the labour that makes the product. It is subtracted from revenue to calculate gross profit on the income statement.
Margin of safety is the gap between where you are and the point where you start losing money. In business, it often means how far sales can fall before a company stops breaking even. In investing, it means buying something for clearly less than you think it is worth, so mistakes hurt less.
Leverage is the use of borrowed money to buy assets or fund growth, so that the possible gain on your own money is bigger. It also makes possible losses bigger. In business, leverage usually describes how much debt a company carries compared with its equity or its earnings.
Liquidity is how easily and quickly something can be turned into cash without losing much of its value. For a business, it means having enough cash, or assets that can become cash fast, to pay the bills that are due soon, such as salaries, rent, suppliers and loan repayments.
Accounts payable is the money a business owes to its suppliers for goods or services it has already received but not yet paid for. It is recorded as a short term liability on the balance sheet. In many companies, accounts payable is also the name of the team that checks, approves and pays incoming invoices.
Amortization means spreading a cost or a debt over a period of time instead of counting it all at once. In accounting it is how the cost of intangible assets, like software, patents or licenses, is expensed over their useful life. With loans it describes paying off the balance through regular installments that cover both interest and principal.
A cash flow statement is a financial statement that shows how much cash came into and went out of a business over a period, and why. It splits cash movements into three groups: operating activities from everyday business, investing activities like buying equipment, and financing activities like loans, new investment or dividends.
A balance sheet is a financial statement that shows, on one specific date, what a business owns (its assets), what it owes (its liabilities) and what belongs to the owners (equity). It always balances because assets equal liabilities plus equity. It is one of the three main financial statements, next to the income statement and the cash flow statement.
Net income is the profit a business has left after subtracting all of its costs from its revenue: the cost of what it sold, running costs like rent and salaries, interest on loans, depreciation and taxes. It is the last line of the income statement, which is why people call it the bottom line.
Gross profit is the money a business has left after subtracting the direct cost of making or buying what it sold from its revenue. It is calculated as revenue minus cost of goods sold, before rent, salaries for office staff, marketing, interest and taxes. It shows whether the core product makes money on its own.
Equity is the ownership value in a business: what is left for the owners after subtracting everything the company owes from everything it owns. On a balance sheet it is assets minus liabilities. In startups and job offers, equity also means a share of ownership itself, given as shares or stock options instead of cash.