glossary terms

words to remember

stakeholder

anyone affected by a business’s operations (customers, employees,shareholders)

shareholder

person who owns part of a company through shares

equity

owners claim on assets after liabilities are paid

what we’re worth

capital

financial resources used to start and run a business (cash, machinery)

SWOT anaylsis

framework for analyzing strengths, weaknesses, opportunities, threats

Order of accounts in trial balances

ALORE

assets, liabilities, owners equity, revenues, expenses, total

current liabilities

debts or obligations that a company expects to settle within 1 year or 1 operating cycle

accruals

revenues earned or expenses incurred that have not been exchanged for cash

covenants and disclosure

covenants: promises to do something

protect lenders and may include

• minimum working capital

• dividends restrictions

• borrowing limits

disclosure must show terms, maturities, rates, and collateral

preparing financial statments

income statments, owners equity, and balance sheet

• Owner withdrew money for personal use - dividends/drawings/withdrawals

• Owner gave some earnings to family (shareholders) - distribution 

  • Debit to dividends (lowers owners equity) 

  • Credit to cash