Balance Sheet & Accounting Equation Vocabulary

Vocabulary flashcards covering key terms related to the balance sheet, accounting equation, and financial statement components.

Accounting Equation

Assets = Liabilities + Owners' Equity; fundamental relationship that must always balance

Balance Sheet

Financial statement showing a company’s financial position at a specific date based on the accounting equation

Asset

Economic resource owned or controlled by a company that is expected to provide future benefit

Liability

Obligation to pay cash, transfer assets, or provide services to another party

Owners' Equity

Residual interest in assets after liabilities, created by owner contributions and retained earnings

Liquidity

A company’s ability to meet its short-term obligations

Solvency

A company’s capacity to meet long-term debts and continue operations

Current Asset

Asset expected to be converted to cash, sold, or used within one year

Non-current Asset

Asset not expected to be converted to cash within one year; long-term asset

Cash

Physical currency or readily available bank deposits owned by a company

Cash Equivalents

Short-term, highly liquid investments easily convertible to known cash amounts

Marketable Securities

Investments in other companies’ stock or debt that can quickly be sold for cash

Accounts Receivable

Amounts customers owe to a company for goods or services sold on credit

Inventory

Goods held for resale that were purchased or manufactured by the company

Property and Equipment

Long-lived tangible assets such as land, buildings, machinery, and vehicles

Operating Lease Right-of-Use Asset

Asset representing control over leased property or equipment under an operating lease

Intangible Asset

Long-lived asset without physical substance, such as patents, licenses, or franchises

Goodwill

Intangible asset representing the excess of purchase price over fair value of net assets acquired

Non-marketable Equity Securities

Investments in privately held companies without readily determinable fair values

Current Liability

Obligation that must be paid or settled within one year

Long-term Liability

Obligation expected to be paid after one year

Accounts Payable

Amounts owed for goods or services purchased on credit

Taxes Payable

Amounts owed to government entities as a result of tax laws

Mortgage Payable

Loan obligation associated with the purchase of property

Unearned Revenue

Liability for goods or services owed to customers who paid in advance

Partners Payable

Amounts owed to content creators or partners for provided content or services

Accrued Expenses

Expenses incurred but not yet paid, reported as a current liability

Long-term Debt

Borrowings such as bonds or mortgages that will be repaid beyond one year

Capital Stock

Amount paid by shareholders to a corporation in exchange for shares of stock

Additional Paid-In Capital

Shareholder contributions that exceed the par or stated value of the issued stock

Retained Earnings

Accumulated net earnings not distributed to shareholders as dividends

Classified Balance Sheet

Balance sheet that separates assets and liabilities into current and long-term categories

Comparative Balance Sheet

Balance sheet presenting data for multiple periods to highlight year-to-year changes

Stockholders' Equity

Owners’ equity section of a corporate balance sheet, including capital stock, additional paid-in capital, retained earnings, etc.

Dividends

Distributions of a corporation’s earnings to its shareholders