The financial vocabulary section of IELTS tests your knowledge of a wide range of terms from the professional world. You will be required to use specific professional terms in both the writing and speaking sections of the test. There are many exercises available to help you learn and practice the terms. For example, you will learn about a mortgage, which is a legal agreement where you borrow money in order to buy a house. The money you borrow is then paid back in instalments, plus interest.
Knowing the basic terms in financial vocabulary will allow you to make smarter financial decisions. Those decisions may seem intimidating, but knowing the terminology will make the process feel less overwhelming. These terms will often be mentioned when you’re budgeting, saving money, and spending money. Learning these terms is the first step to financial literacy.
To understand these terms, you need to understand the difference between revenue and expenses. Revenue is the amount of money a company earns from selling goods or services. Expenses are the amount of money a company has to spend to generate the same revenue. Net cash is the amount that remains after subtracting the costs of running the business. Profit is the profit left over after all expenses, including overhead, depreciation, and taxes. Dividends, on the other hand, are the money that the company pays to shareholders in exchange for their stock. These payments are taxed as corporate income tax.
Debit and credit are other terms for money in the financial world. A debit is a withdrawal of money and a credit is a deposit. A bank statement will show both types of transactions. A bank balance is the amount of money a bank account has at any one time. When you spend more money than you earn, your bank balance will be in red