Accounting Terms
Rules accountants follow (Generally Accepted Accounting Principles)
What does GAAP mean?
Assets = Liabilities + Owner’s Equity
What is the accounting equation?
Money customers owe the business
What is accounts receivable?
Which side is the debit side?
left side
Proof that a transaction happened
What is a source document?
Money a business earns from sales
What is revenue?
Revenue – Expenses = Net Income (or Net Loss)
What is the income statement equation?
Money the business owes to others
What is accounts payable?
Which accounts usually have a debit balance?
Assets and Expenses
Receipt, invoice, or check
Give one example of a source document
A place where all money records are kept
What is a ledger?
When a business spends more money than it makes
What does net loss mean?
Written promises to pay money later
What are notes payable?
When an account increases with a debit
What is a normal debit balance?
What are the two parts of an income statement?
Revenue and Expenses
A book where you write down business transactions in order
What is a general journal?
If a business has $50,000 in assets and $20,000 in debts, what is the owner’s equity?
$30,000
Anything the business owns that has value
What is an asset?
Is accounts receivable a debit or a credit?
Debit (it's something the business owns)
What are two parts of a balance sheet?
Assets and Liabilities
A government group that helps small businesses (Small Business Administration)
What is SBA?
If the business made or lost money
What does an income statement show?
Money the business needs to pay back (debts)
What are liabilities?
What types of accounts increase with a credit?
Liabilities, Owner’s Equity, and Revenue
What is a balance sheet used for?
To show what a business owns and owes at a certain time