| A | B |
|---|
| Asset | anything of value that is owned |
| Liability | Something owed by a business |
| Owner's Equity | the amount left when total liabilities are subtracted from total assets |
| Accounting Equation | shows the relationship among assets, liabilities, and owner’s equity |
| Accounting Equation | Assets = Liabilities + Owner’s Equity |
| Transaction | A business activity changes assets, liabilities, or owner’s equity. |
| Account | a record of information about a single item in the accounting equation |
| Account Title | the name given to an account |
| Account Balance | the amount in an account at any given time |
| Capital | account that summarizes Owner’s Equity |
| Cash | actual money the business has |
| Supplies | things used in operating the business |
| Pre-Paid Insurance | An asset that you pay ahead of time for protection |
| Accounts Payable | Liability incurred when a business purchases something on credit |
| Accounts Receivable | Asset gained when someone purchases things from a business on credit |
| Accounts Payable | example: a business gets supplies and agrees to pay for them at a later date |
| Accounts Receivable | example: a business performs services for someone, but does not receive cash at the time of the service. |
| Balance Sheet | financial statement that shows assets, liabilities, and owner’s equity on a specific date. |
| Balance Sheet | a “snapshot” of a businesses financial situation on a specific date |
| Revenue | an increase in owner’s equity resulting from business operations |
| Revenue | example: cash received for services performed |
| Expense | money goes out of the business to pay rent |
| Expense | a transaction that causes a decrease in owner’s equity and results from business operation |
| Double Entry Accounting | system of accounting using T accounts, Debits, and Credits |
| Debit | amount recorded on the left side of a T-account |
| Credit | an amount recorded on the right side of a T-account |
| Income Statement | financial document that reports total revenue and expenses for a specific period |
