Introduction to Accounting Transactions and Financial Statements

These flashcards cover key vocabulary terms and concepts related to accounting transactions, financial statements, and performance measurements.

Assets

Resources owned by a business that are expected to provide future economic benefits.

Liabilities

Obligations of a business that arise during business operations and are settled over time through the transfer of economic benefits.

Equity

The residual interest in the assets of the entity after deducting liabilities; represents ownership.

Revenues

Income generated from normal business operations, typically from the sale of goods and services.

Expenses

Costs incurred by a business in the process of earning revenue.

Income Statement

A financial statement that reports a company’s financial performance over a specific accounting period, showing revenues and expenses.

Balance Sheet

A snapshot of a company's financial position at a specific point in time, detailing assets, liabilities, and equity.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives.

Common Stock

A type of security that represents ownership in a corporation and a claim on a portion of the company’s assets and earnings.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Trial Balance

A report that lists the balances of all general ledger accounts of a business at a specific point in time.

Retained Earnings

Cumulative amount of net income that a company retains, rather than distributing to shareholders as dividends.

Dividends

Payments made to shareholders from the company's earnings.

Financial Ratios

Calculations that are used to assess the financial performance of a company, often used for comparison against industry standards.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Expense Accounts

Specific categories designed to track the various types of expenses incurred by a business.

Cash Flows from Operations

Cash generated from normal business operations, including sales of goods and services.

Investing Activities

Cash flows associated with the acquisition and disposal of long-term assets and investments.

Financing Activities

Cash flows that result from borrowing or repaying debt, issuing or repurchasing stock, or paying dividends.

Account Payable

An obligation to pay a supplier for goods or services purchased on credit.