| A | B |
|---|
| transaction | when money is exchanged for business reasons; needs to be recorded |
| T-accounts | chart used in double-entry accounting to record debits and credits |
| double-entry accounting | system for recording equal debits and credits for every business transaction |
| debits | amount entered on the left side of a double-entry account |
| credits | amount entered on the right side of a double-entry account |
| liability | debt, obligation, or claim owed by a business |
| trial balance | procedure used to make sure that total debits equal total credits |
| bank reconciliation | process of matching the bank's monthly statement with a business's intermal accounting records |
| cost of sales | food cost for one period (usually a month) ; Opening inventory + Purchases - Closing inventory |
| cost | price paid for goods or services when the goods are received or the services are rendered |
| expenses | cost of items like food, supplies, wages, and insurance that are necessary to run a business |
| direct cost | expenses that are the responsibility of a specific department |
| indirect costs | expenses that are not easily charged to any one specific department |
| revenue | money that an operation takes in when it sells products or services |
| assets | items of value that are owned by a business |
| depreciation | method of recording the value of an asset as it gradually decreases over its lifetime |
| income statement | financial statement showing revenue and expenses over a period of time, as well as resulting profit or loss |
| profit | money left when expenses have been subtracted from revenue |
| loss | when a business's expenses are greater than its revenue |
| contributory income | amount of income that a particular department contributes to a foodservice establishment's total income |
| contributory income percent | percentage of a department's revenue that is income |
| balance sheet | financial report showing a company's assets, liabilities, and owners' equity at a particular date |
| balance sheet equation | formula that shows what a business owes, what it is worth, and the items it owns; (Assets = Liabilities + Owners' equity) |
| current assets | assets that can or will be converted to cash within one year |
| fixed assets | items such as land, buildings, and equipment that have a life expectancy of at least three years |
| current liabilities | liabilities that must be paid within one year |
| long-term liabilities | liability that must be paid a year or more after the balance sheet date |
| owners' equity | total assets minus total liabilities; tells the worth of the business |
| retained earnings | profit that is put back into the business |
