Video: Introduction & Chapter 1 - The Balance Sheet

Vocabulary-style flashcards covering key terms from the video notes on the Balance Sheet, assets, liabilities, equity, and related accounting standards.

Balance Sheet

A financial statement showing assets, liabilities, and owner's equity at a specific date.

Assets

Items of value owned by a business or person.

Liabilities

Debts owed to other businesses or individuals.

Owner's Equity (OE)

The owner's claim on the assets of the business; the net worth of the business.

Net Worth

Assets minus liabilities; the amount you have left after paying debts.

Accounting Standards

Standard rules for reporting and recording accounting information; include IFRS or ASPE; used for consistency.

IFRS (International Financial Reporting Standards)

International accounting standards; referred to in notes as 'Accounting Standards'.

GAAP

Generally Accepted Accounting Principles; described as the old name in the notes.

Cost Principle

Assets are recorded at the cost of acquisition or construction.

Balance Sheet Equation

Assets = Liabilities + Owner's Equity (OE); equivalently OE = A − L.

Current/Short-term Assets

Assets expected to be converted to cash within 1 year; listed by liquidity (most liquid first).

Long-term/Non-current Assets

Assets lasting longer than 1 year; listed in order of useful life.

Accounts Receivable

Money owed to you by customers or debtors, expected to be collected.

Accounts Payable

Debts owed to other businesses or creditors; amounts you must pay.

Cash

Currency, bank deposits, cheques, money orders, receipts; includes money owed to you by customers in notes’ sense.

Office Supplies

A type of asset used by the business for daily operations.

Truck

A business asset used for operations; example of a long-lasting asset.

Furniture

A business asset used in operations; example of a long-lasting asset.

Bank Loan

Debt owed to a bank; typically due within 1–5 years.

Mortgage Payable

Long-term debt secured by real estate; usually paid over many years.

Capital

Owner’s equity account (the owner’s investment or claim in the business); examples include 'M. Chan, Capital'.

Equity vs. Net Worth

Equity refers to the owners’ claim in the business; net worth is the overall equity minus liabilities for the personal balance sheet or the business as a whole.

Personal Net Worth (context in notes)

Net worth for an individual; calculated by selling assets and paying off debts to see what's left.

Business Entity Principle

The concept that a business is separate from its owners for accounting and financial reporting.