Accounting

accounting cycle

six-step procedure that results in the preparation and analysis of the major financial statements.

bookkeeping

The recording of business transactions.

journal

The record book or computer program where accounting data are first entered.

double-entry bookkeeping

The practice of writing every business transaction in two places.

ledger

A specialized accounting book or computer program in which information from accounting journals is accumulated into specific categories and posted so that managers can find all the information about one account in the same place.

trial balance

A summary of all the financial data in the account ledgers that ensures the figures are correct and balanced.

financial statement

A summary of all the transactions that have occurred over a particular period

balance sheet

Financial statement that reports a firm’s financial condition at a specific time and is composed of three major accounts: assets, liabilities, and owners’ equity

current assets

Items that can or will be converted into cash within a year

Fixed assests

Assets that are relatively permanent, such as land, buildings, and equipment

Intangible assests

Long term assets (trademark, copyrights) that have no real physical form but do have value

Liabilities

What the business owes to others

Accounts payable

Current liabilities