Financial Statements
The report that tracks the actual cash coming in and going out of a business.
What is a cash flow statement?
Things of value that a company owns, like cash, buildings, or inventory.
What are assets?
In double-entry accounting, every single debit must have an equal one of these.
What is a credit?
The total value of goods, merchandise, or materials a business currently has on hand ready to sell.
What is inventory?
The term for the total money a business makes from selling its goods or services before any costs are taken out.
What is revenue (or sales)?
The statement that tracks your income and expenses over time.
What is an income statement?
Money that a company owes to outside lenders, banks, or suppliers.
What are liabilities?
The side of a standard accounting ledger where debits are always recorded.
What is the left side?
The bills, invoices, and short-term debts a business still needs to pay to its outside vendors or suppliers.
What is accounts payable?
The term for the costs a business runs into to keep operating, like paying rent, salaries, or utilities.
What is an expense?
The sheet that shows your assets, liabilities, and equity at a specific point in time.
What is a balance sheet?
The fundamental accounting equation states that assets must equal liabilities plus this.
What is equity?
The side of a standard accounting ledger where credits are always recorded.
What is the right side?
The money that customers formatals or clients owe to a business for services that have already been delivered.
What is accounts receivable?
What you get when you subtract a business's total expenses from its total revenue.
What is profit (or net income)?
The popular two-word phrase used to describe a company's final net income on an income statement.
What is the bottom line?
If a business has $100 in total assets and $40 in total liabilities, this is their total equity.
What is $60?
The visual letter shape used by accountants to map out and balance debits and credits on a page
What is a T (a T-account)?
The physical or digital documents, like receipts and invoices, that prove a business transaction actually happened.
What are source documents?
The term used when a company's expenses are higher than its revenues, resulting in a negative profit.
What is a net loss?
The standard 12-month period a company chooses to use for its annual financial reporting, which doesn't always start on January 1st.
What is a fiscal year?
The specific term for the profit a company keeps and reinvests in the business rather than paying it out to owners.
What are retained earnings?
Because it is an asset, an increase in your company's cash account is always recorded as this type of entry.
What is a debit?
The accounting method where you record revenues when they are earned and expenses when they happen, rather than when cash changes hands.
What is accrual accounting?
The independent professional group responsible for officially checking a company's financial books to ensure they are accurate.
What are auditors?