| A | B |
|---|
| Accounting Equation | provides the framework for all accounting events; Assets = Liabilities + Stockholder’s Equity |
| Accounts | records which collect specific business transactions |
| Assets | owned company resources which have dollar values |
| Liabilities | money owed by a company |
| Stockholder’s Equity | amount/type of assets the business owner(s) can claim; referred to as “owner’s equity” if the business is not a corporation |
| Debit | left side of the accounting equation (assets) |
| Credit | right side of the accounting equation (liabilities and stockholder’s equity) |
| Chart of Accounts | directory which groups the accounts used in a business |
| Revenue | earnings for work completed or goods delivered |
| Expenses | payments made to help the company earn revenue |
| T-Account | visual display of a transaction’s effect on an account; debits are on the left side and credits are on the right side |
| Double-Entry System | accounting rule where at least two accounts are always affected by every transaction; at least one account must be on the debit side and one account must be on the credit side |
| Normal Balance | balance an account type is always expected to have; the side of the accounting equation where an account is normally found |
| Service Business | business which works for a customer and does not provide tangible goods |
| Tangible Good | physical object |
| Intangible Goods | goods which are not physical objects such as services |
| Accounting Cycle | process of recording accounting procedures in an accounting period |
| Source Document | proves a transaction occurred |
| Journal | form for recording transactions in chronological order |
| Ledger | collection of all accounts in a business |
| Posting | transferring information from the journal to the ledger |
| Trial Balance | list of all accounts and their balances at a certain point |
| Adjusting Entries | record of financial transactions which change the balance of some accounts |
| Financial Statements | formal reports of company activities which are viewable by the public |
| Income Statements | financial report which shows how profitable a company is during a certain accounting period; displays revenues, expenses, and net income |
| Retained Earnings | earnings maintained by the company for financial growth |
| Statement of Retained Earnings | financial statement outlining the changes in retained earnings for a certain period |
| Balance Sheet | external (public) financial statement showing a company’s financial position at a certain time; assets, liabilities and stockholder’s equity are recorded on this document |
| Statement of Cash Flow | financial statement which reports cash generated and used by a company |
| Operating Activities | receiving cash from revenue/paying expenses |
| Investing Activities | using cash for assets |
| Financing Activities | receiving cash from owners/paying owners |
