Accounting terms

Assets

Things of value to a business or person

Liabilities

debts that a company owes to somebody else

Accounts payable

Accounts to be paid in the the future for goods or services already bought.

Accounts Receivable

Amounts to be received from costumers in the future due to the sale of goods or services.

Manufacturing Business

a business that makes finished goods from raw materials by hand or machinery

Merchandising Business

a business that purchases finished goods for resale to customers.

Service Business

a business that performs an activity for a fee

Creditor

A person or business to whom money is owned.

Debtor

A person/business who owes money to another business.

Net worth

total assets minus total liabilities

Owner’s Equity

the amount remaining after the value of all liabilities is subtracted from the value of all assets.

Balance Sheet

A financial statement that reports assets, liabilities, and owner's equity on a specific date.

Non Profit Business

An organization that can function like a business but that uses the money it makes to fund the causes identified in its charter.

Accounting cycle

The series of accounting activities included in recording financial information for a specific time period

CGA

Certified General Accountant

CMA

Certified Management Accountant

CPA

certified public accountant

CPA

certified public accountant

CGA

Certified General Accountant

auditing

Reviewing and evaluating the information used to prepare a company's financial statements.

Cost Principle

An accounting principle that states that companies should record assets at their cost.

Cost Principle

An accounting principle that states that companies should record assets at their cost.

Business entity Concept

financial information is recorded and reported separately from the owner's personal financial information

Principle of Conservatism

When making assumptions or estimates, should pick option that is lowest net income or lowest total assets.

Fundamental accounting equation

Assets = Liabilities + Owners' equity;

Materiality Principle

It's okay to ignore some GAAPs if it does not result in misleading financial statements.