| A | B |
|---|
| asset | anything of value owned by a business |
| current assets | cash and those items that can be readily converted to cash such as inventory and accounts receivable |
| long-term assets | assets with a lifespan of more than a year such as land, buildings, equipment |
| liabilities | amounts owed by the business to others |
| current liabilities | debts that will be paid within a year |
| long-term liabilities | debts that will continue for longer than a year such as, land, buildings, expensive equipment |
| owner's equity | the value of the business after liabilities are subtracted from assets (value of investment) |
| balance sheet | financial document that lists assets, liabilities, and owner's equity for a business on a specific date |
| income statement | financial document that reports revenue, expenses and net income or loss from operations of a business for a specific period |
| financial performance ratio | comparison of a company's financial elements that indicate how well the business is performing |
| current ratio | current assets compared to the current liabilities |
| debt to equity ratio | the company's liabilities divided by the owner's equity |
| return on equity ratio | the net profit of the business compared to the amount of owner's equity |
| net income ratio | the total sales compared to the net income for a period of time |
| discrepancies | differences between actual and budgeted performance |
