Financial Accounting - Vocabulary Flashcards

Vocabulary flashcards covering key accounting terms used in the lecture notes (income statement, retained earnings, and balance sheet components).

Net Income

The amount by which total revenues exceed total expenses for a period; increases retained earnings.

Net Loss

When total expenses exceed total revenues; decreases retained earnings.

Retained Earnings

Cumulative earnings kept in the business; Beginning Retained Earnings plus Net Income minus Dividends, part of stockholders’ equity.

Dividends

Distributions of a corporation's earnings to shareholders; decrease retained earnings.

Beginning of Year Retained Earnings

RE balance at the start of the period.

Ending of Year Retained Earnings

RE balance at the end of the period after net income and dividends.

Total Assets

Sum of all assets owned by the company; reported on the balance sheet.

Total Liabilities

Sum of all obligations to creditors; part of the balance sheet.

Total Revenues

Sum of all revenue items on the income statement.

Total Expenses

Sum of all expense items on the income statement.

Common Stock

Equity issued to shareholders; represents ownership and contributes capital.

Accounts Receivable

Amounts owed to the company by customers from credit sales; asset.

Accounts Payable

Amounts owed to suppliers; liability.

Cash

Currency and cash equivalents; asset.

Equipment

Long-term tangible assets used in operations; asset.

Notes Payable

Written promissory notes to pay a debt; liability.

Revenue

Income from delivering goods/services; increases equity.

Expense

Costs incurred to earn revenues; decreases net income.

Income Statement

Financial statement that summarizes revenues and expenses to determine net income or loss.

Balance Sheet

Financial statement listing assets, liabilities, and equity at a point in time.

Ticket Revenues

Revenue from selling airline tickets.

Aircraft Fuel Expense

Expense for fuel used by aircraft.

Interest Expense

Cost of borrowed funds; expense on the income statement.

Income Tax Expense

Provision for income taxes; expense on the income statement.