Account Types & Financial Statements

These flashcards cover the various account types and financial statements, helping students understand key concepts and definitions related to accounting.

Asset

Anything owned by a business that has value (e.g., cash, inventory).

Liability

Amounts owed by a company to creditors (e.g., loans, accounts payable).

Equity

The owner’s residual claim on the assets of the business after liabilities are deducted.

Revenue

Income generated from the normal business operations (e.g., sales).

Expense

Costs incurred in the process of generating revenue.

Accounts Payable

Liability representing amounts owed by a company to vendors for purchases already made.

Balance Sheet

Accounts Receivable

Asset representing amounts owed to a company by customers for revenue already recorded.

Balance Sheet

Accumulated Depreciation

Contra asset that represents the total amount of depreciation expense recorded on operating assets.

Balance Sheet

Additional Paid in Capital (APIC)

Amounts paid by investors (shareholders) when stock is issued (amount that exceeds par value) - Equity

Balance Sheet

Allowance for Doubtful Accounts (AFDA)

Contra asset that estimates the amount of accounts receivable that cannot be collected.

Balance Sheet

Bad Debt Expense

Expense related to the estimated risk of not collecting receivables.

Income Statement

Bonds Payable

Liability for the principal amount owed to creditors who purchased bonds.

Balance Sheet

Cash

Current asset representing the amount of cash available for use in the business.

Balance Sheet

Common Stock

Equity representing amounts paid by investors when stock is issued at par value.

Balance Sheet

Cost of Goods Sold

Expense representing the cost of inventory sold during a period.

Income Statement

Deferred Revenue

Liability representing cash received in advance for work to be performed.

Balance Sheet

Depreciation Expense

Expense related to the reduction in value of operating assets over time.

Income Statement

Interest Expense

Expense related to the cost of borrowed money on notes or bonds.

Income Statement

Interest Payable

Liability representing balance owed to creditors for interest expense already recorded.

Balance Sheet

Interest Revenue

Current year revenue associated with money loaned on notes receivable or other investments.

Income Statement

Inventory

Asset representing the cost of products held for sale.

Balance Sheet

Marketable Securities (Short Term Investments)

Asset representing current market value of short-term investments.

Balance Sheet

Notes Payable

Liability for the principal amount owed to creditors for borrowed money.

Balance Sheet

Notes Receivable

Asset representing the principal amount loaned to someone else.

Balance Sheet

Prepaid Insurance

Asset representing amount paid in advance for future insurance coverage.

Balance Sheet

Prepaid Rent

Asset representing amount paid in advance for future months of rent.

Balance Sheet

Property, Plant & Equipment (PP&E)

Asset representing original cost of long-term operating assets.

Balance Sheet

Retained Earnings

Equity representing accumulated net income earned by the business less dividends.

Balance Sheet

Salaries Expense

Expense related to wages of employees for the business.

Income Statement

Salaries Payable

Liability representing amounts owed to employees for work performed.

Balance Sheet

Sales Revenue

Revenue representing total value of work performed for customers.

Income Statement

Supplies

Asset representing cost of operating supplies purchased for future use.

Balance Sheet

Tax Expense

Expense related to tax liability incurred during the year.

Income Statement

Taxes Payable

Liability for tax amounts owed to governmental agencies.

Balance Sheet

Treasury Stock

Contra equity representing the cumulative amount paid to repurchase issued stock.

Balance Sheet