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Assets

A resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.

Equity

Residual interest in the assets of the enterprise after deducting all its liabilities.

Liabilities

A present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits.

Cash

Any medium of exchange that a bank will accept for deposit at face value. It includes coins, currency, checks, money orders, bank deposits, and drafts.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Notes Receivable

A written pledge that the customer will pay the business a fixed amount of money on a certain date.

Inventories

Assets held for sale in the ordinary course of business; in the process of production for such sale; or in the form of materials or supplies to be consumed in the ordinary course of services.

Current Assets

Assets expected to be realized, sold, or consumed within the normal operating cycle or within twelve months; includes cash or cash equivalents unless restricted.

Account Receivable

Claims against customers arising from the sale of services or goods on credit.

Prepaid Expenses

Expenses paid by the business in advance; considered assets until they contribute to the earning process.

Property, Plant, and Equipment

Tangible assets held for use in production, rental, or administration, and expected to be used during more than one period.

Accumulated Depreciation

A contra account containing the sum of periodic depreciation charges, deducted from the related asset's cost.

Intangible Assets

Identifiable nonmonetary assets without physical substance, such as goodwill, patents, copyrights, and trademarks.

Non-current Assets

All assets not classified as current; generally used or realized beyond twelve months.

Accounts Payable

Represents the reverse of accounts receivable; buyer agrees to pay for goods or services received.

Notes Payable

A liability wherein the business promises to pay a specified amount of money on a future date.

Unearned Revenues

Payments received before providing goods or services; recorded as a liability until earned.

Current Liabilities

Obligations expected to be settled within the normal operating cycle or within twelve months.

Accrued Liabilities

Amounts owed for unpaid expenses, such as salaries, utilities, interest, and taxes.

Current Portion of Long-Term Debt

Portions of long-term debt due within one year from the balance sheet date.

Mortgage Payable

Long-term debt secured by certain assets of the business.

Bonds Payable

Long-term funds obtained through bond issuance specifying repayment terms and interest.

Non-Current Liabilities

Liabilities not classified as current; obligations due beyond one year.

Capital

Records original and additional owner investments, profits, and losses; reduced by withdrawals.

Withdrawals

Owner’s cash or asset withdrawals recorded separately from capital.

Income Summary

A temporary account used to close income and expense accounts; shows net income or loss before closing to capital.

Income

Increases in economic benefits during the period from inflows or enhancements of assets or reductions in liabilities.

Gains

Other items meeting the income definition that may or may not arise in ordinary activities.

Revenue

Income arising from ordinary activities like sales, fees, interest, etc.

Expenses

Decreases in economic benefits due to outflows or asset depletion, excluding distributions to owners.

Service Income

Revenue from services performed, e.g., laundry or accounting services.

Sales

Revenue from merchandise sales.

Cost of Sales

Cost incurred to purchase or produce products sold.

Salaries or Wages Expense

Payments related to employment, including wages and benefits.

Rent Expense

Payments for rented space, equipment, or other assets.

Telecommunications, Electricity, Fuel & Water Expenses

Expenses for utilities and facility use.

Supplies Expense

Cost of supplies used in daily operations.

Insurance Expense

Expired portion of premiums paid on insurance coverage.

Depreciation Expense

Portion of a tangible asset’s cost charged as expense.

Interest Expense

Expense from using borrowed funds.

Uncollectible Accounts Expense

Estimated doubtful receivables charged as expense.

Account

A detailed record of increases, decreases, and balances of financial elements in financial statements.

Accounting Equation

Assets = Liabilities + Equity; shows financial position structure.

Business Transaction

Event or condition that affects financial position and can be reliably recorded.

Accounting Event

Economic occurrence that changes assets, liabilities, or equity.

Statement of Financial Position (Balance Sheet)

Lists assets, liabilities, and equity of an entity at a specific date.

Statement of Comprehensive Income (Income Statement)

Summarizes revenues and expenses for a specific period.

Statement of Changes in Equity

Summarizes changes in capital, including investments, profits/losses, and withdrawals.

Statement of Cash Flows

Reports cash inflows and outflows during a period.

Liquidity

Availability of cash in the near future to meet financial obligations.

Solvency

Ability to meet long-term financial obligations.

Financial Flexibility

Ability to adapt cash flows to meet unexpected needs or opportunities.

Operating Activities

Business operations generating cash inflows and outflows, including services and goods.

Investing Activities

Include loans, investments, and acquisitions/disposals of long-term assets.

Financing Activities

Involves obtaining and repaying funds from owners and creditors.