| A | B |
|---|
| fiscal year | a tax year selected by a business for accounting purposes |
| cash basis | a method of recording income and expenses in which income is recorded when it is received and expenses when they are paid |
| accrual basis | a method of recording income and expenses in which income is recorded when it is earned and expenses when they are incurred |
| accounts payable | expenses that have been incurred but not yet paid for; money owed by a business |
| accounts receivable | sales that have been made but not yet collected; money owed to a business |
| single-entry system | a simple accounting system noting only amounts dues to and owned by a business |
| double-entry system | a bookkeeping method in which each transaction is entered twice in the ledger--as a debit to one account and a credit to another account |
| debit | an item that increases the balance of an asset account |
| credit | an item that decreases the balance of an asset account |
| journals | books used to record business tranactions for the daily record keeping of a double-entry system |
| cash receipts journal | special journals for all cash (and checks) received |
| cash disbursements journal | special journals for all payments made in cash and check form |
| sales journal | special journals for all sales on account |
| purchases journal | special journals for all purchases on account |
| ledger | a collection of all the accounts of a business |
| cash flow statement | a financial statement that describes the flow of cash into and out of a business |
| profit-and-loss statement | a statement that compares revenues and expenses over a specific period to see if the business has made a profit |
| balance sheet | financial statement that tells an entrepreneur what his or her business is worth at any given time |
| assets | items of value that belong to a business or an individual |
| owner's equity | the amount left over after liabilities are subtracted from assets |
