Accounting Terms
Assets: Resources owned by a company that have economic value. Examples include cash, inventory, and property.
Liabilities: Debts or obligations owed by a company to external parties. This includes loans, accounts payable, and accrued expenses.
Equity: The residual interest in the assets of a company after deducting liabilities. It represents the owners' claim on the company's assets and is calculated as assets minus liabilities.
Revenue: The income generated by a company from its primary business activities. It includes sales revenue, service fees, and interest income.
Expenses: The costs incurred by a company in order to generate revenue. Examples include salaries, rent, utilities, and advertising expenses.
Income Statement: Also known as the profit and loss statement, it summarizes a company's revenues, expenses, and net income (or loss) over a specific period of time.
Balance Sheet: A financial statement that provides a snapshot of a company's financial position at a specific point in time. It shows the company's assets, liabilities, and equity.
Cash Flow Statement: This statement tracks the inflow and outflow of cash from a company's operating, investing, and financing activities. It helps assess a company's ability to generate cash and its liquidity.
Accounts Receivable: The amount of money owed to a company by its customers for goods or services provided on credit. It is considered an asset on the balance sheet.
Accounts Payable: The amount of money owed by a company to its suppliers or creditors for goods or services received on credit. It is considered a liability on the balance sheet.
Depreciation: The systematic allocation of the cost of a long-term asset over its useful life. It reflects the decrease in value of the asset over time.
Accruals: Expenses or revenues that have been incurred but not yet recorded in the accounting records. They are recognized to ensure accurate financial reporting.
GAAP: Generally Accepted Accounting Principles. These are a set of accounting standards and guidelines that companies must follow when preparing financial statements.
Audit: An independent examination of a company's financial records, systems, and processes to ensure accuracy and compliance with accounting standards.
Profit Margin: A financial ratio that measures a company's profitability by expressing its net income as a percentage of its revenue
Assets: Resources owned by a company that have economic value. Examples include cash, inventory, and property.
Liabilities: Debts or obligations owed by a company to external parties. This includes loans, accounts payable, and accrued expenses.
Equity: The residual interest in the assets of a company after deducting liabilities. It represents the owners' claim on the company's assets and is calculated as assets minus liabilities.
Revenue: The income generated by a company from its primary business activities. It includes sales revenue, service fees, and interest income.
Expenses: The costs incurred by a company in order to generate revenue. Examples include salaries, rent, utilities, and advertising expenses.
Income Statement: Also known as the profit and loss statement, it summarizes a company's revenues, expenses, and net income (or loss) over a specific period of time.
Balance Sheet: A financial statement that provides a snapshot of a company's financial position at a specific point in time. It shows the company's assets, liabilities, and equity.
Cash Flow Statement: This statement tracks the inflow and outflow of cash from a company's operating, investing, and financing activities. It helps assess a company's ability to generate cash and its liquidity.
Accounts Receivable: The amount of money owed to a company by its customers for goods or services provided on credit. It is considered an asset on the balance sheet.
Accounts Payable: The amount of money owed by a company to its suppliers or creditors for goods or services received on credit. It is considered a liability on the balance sheet.
Depreciation: The systematic allocation of the cost of a long-term asset over its useful life. It reflects the decrease in value of the asset over time.
Accruals: Expenses or revenues that have been incurred but not yet recorded in the accounting records. They are recognized to ensure accurate financial reporting.
GAAP: Generally Accepted Accounting Principles. These are a set of accounting standards and guidelines that companies must follow when preparing financial statements.
Audit: An independent examination of a company's financial records, systems, and processes to ensure accuracy and compliance with accounting standards.
Profit Margin: A financial ratio that measures a company's profitability by expressing its net income as a percentage of its revenue
