Accounting Fundamentals and Financial Statements

Vocabulary practice cards covering the basic components of the balance sheet and income statement based on lecture transcript notes.

Uses of Funds

A category equivalent to Sources of Funds, representing how a company allocates its capital, fundamentally expressed as $\text{Uses of Funds} = \text{Sources of Funds}$.

Fundamental Accounting Equation

$$\text{Assets} = \text{Liabilities} + \text{Equities}$$

Assets

Money and other items the company owns, representing uses of funds.

Liabilities

Borrowing from non-owners, representing a source of funds.

Equity

Funding from owners, representing a source of funds.

Accounts Receivable

The amount that customers owe the company.

Inventory

Completed products, partially completed products, and product supplies.

Accounts Payable

The amount a company owes for goods and services.

Debt

The amount a company has borrowed, primarily from banks.

Paid-In Capital

Money received in exchange for ownership shares in the company.

Retained Earnings

Company earnings kept in the company rather than returned as dividends.

Net Income

The difference between revenue and expenses; synonyms include net profit and net earnings.

Depreciation Expense

The portion of an asset's original cost that is consumed, usually based on a regulated schedule.

Revenue

The value of goods and services delivered.

Expenses

The cost of goods and services consumed.

Cost of Goods Sold (COGS)

Direct material and labor costs of producing specific products plus the indirect manufacturing costs that support creating all products.

Gross Income

The difference between Revenue and Cost of Goods Sold; synonyms include Gross Profit and Gross Margin.

Sales, General, and Administrative Expenses (SG&A)

Overhead non-manufacturing costs of doing business, such as sales, marketing, finance, accounting, human resources, and other business services.

Other Expenses (or Income)

Costs, excluding interest and income taxes, that do not fit into provided categories according to relevant accounting standards.

Interest

The amount of interest on debt.