Accounting Fundamentals Flashcards

This set of vocabulary flashcards covers essential accounting terms including assets, liabilities, equity, and specific account types like accounts payable and receivable.

Accounts Payable

Obligation to suppliers for purchased inventories, or money owed by the business to suppliers because goods or services were purchased on credit.

Accounts Receivable

Assets that pertain to the company's right to collect or right to claim payment, representing money owed by customers due to credit purchases.

Owner's Capital

Composed of the owner's investment and the accumulated net income of the company, net of any distribution to the owner.

Inventory

The cost of merchandise that the company purchased to resell to its customers in the normal course of business; goods held for the purpose of resale.

Cash

The account that reports the balances of bank savings and checking accounts, as well as bills, coins, and checks on hand.

Accrued Expenses

Obligation to pay for goods and services already used, such as salaries, utilities, rent, and interest; expenses incurred but not yet paid.

Unearned Income

Advance payment made by customers while goods and services are not yet delivered to the customers.

Property, Plant, and Equipment

Long-term assets, such as equipment, buildings, and machinery, that are used in the operations of the company.

Notes Payable

Obligation to pay documented in a promissory note.

Prepaid Expenses

Asset account that refers to future expenses paid in advance before the service or goods are used.

Notes Receivable

A written promise by another party to pay a specific amount of money to the business on a specified date.

Long-term Payable

An obligation or debt that is not expected to be settled within the normal operating cycle or within one year.

Assets

Resources controlled by the business as a result of past events and expected to provide future economic benefits.

Liabilities

Present obligations of the business arising from past events that are expected to result in an outflow of resources.

Equity

The residual interest in the assets of the business after deducting all liabilities.