17.1-17.3 buissness

accounting

language of business where you record, classify, Summarize, interpret systems

accounting cycle

6 steps for preparation & analysis of the financial statements.

Bookkeeping

record all transactions.

whats the first rule in accounting cycle

analyze document

whats the 2nd rule in accounting cycle

make journal

whats the 3rd rule in accounting cycle

make ledger

whats the 4th rule in accounting cycle

trail balance

whats the 5th rule in accounting cycle

Financial statement (es., B.S., Soc)

whats the 6th rule in accounting cycle

analyze financial statements.

trail balance

journal=ledger

Financial statement

all transactions occurred in a specific time.

Asset

L+OE

asset

things you own, ex: furniture, land

fixed asset

more than 1 yr ex.: land, equipment

current asset

less than 1yr, ex.: cash

Intangible assets

copyright, something that isn't physical (can't be touched)

liquidity

how fast current assets can be converted into cash

liability

what you owe

current liability:

less than 1yr ex. ____ payable

Long-term liability

more than 1 yr ex: mortgage, loan

Owner equity

the amount of something that belongs to you before it becomes fully asset. (carpet)

retained earnings

using profit to reinvest

Depreciation

a fixed asset that's value increases or decreases

gross profit

rev-cogs

operating income

gross profit-expense

net income

operating-tax

Cost of goods sold:

how much you spend on the stuff you sold (w/out profit)

expense

is money you spent (rent, wages, salaries, Paid)

revenue

something($) you earn ( ____ earned / recieved / Sold)

gross profit

profit from COGS ex: bottle you buy for 2 (COGS) and sell for 5 Profit is 3 (gross profit)

cash flow

money in and out

Operation

salary, taxes, interest, dividend

investment

sale of long term asset

financing:

debt