The Basics
The process of planning, recording, analyzing, and interpreting financial information
What is accounting?
An increase in owner's equity resulting from the sale of goods or services
What is revenue?
An amount owed
What is a liability?
The original amount of a note or loan
What is principal?
A specified amount of money that the insured must pay before an insurance company starts to pay
What is a deductible?
Anything of value that is owned
What is an asset?
Assets = Liabilities + Owner's Equity
What is the accounting equation?
Transferring information from a journal entry to a ledger account
What is posting?
The process that requires an employer to withhold a portion of an employee's paycheck to pay a court-ordered debt settlement
What is (wage) garnishment?
An unchanging rate charged on a liability, such as a loan or a mortgage
What is fixed interest?
An amount recorded on the right side of an account
What is a credit?
Amounts to be paid in the future for goods or services already acquired
What are accounts payable?
A form for recording transactions in chronological order
What is a journal?
A loss in the usefulness of an asset as a result of wear or obsolescence
What is depreciation?
Expenses that change regularly and may be directly influenced by day to day choices
What are variable expenses?
An amount recorded on the left side of an account
What is a debit?
Amounts to be received in the future due to the sale of goods or services
What are accounts receivable?
The cost of goods or services used to operate a business
What is an expense?
The length of time from the signing date to the maturity date of a note or loan, usually expressed as the number of days or months
What is term?
The process of calculating how much money must be earned or saved during a particular period of time, and of planning how to spend it
What is budgeting?
Standards and rules that accountants follow while recording and reporting financial activities
What is/are GAAP?
A list of accounts used by a business
What is a chart of accounts?
A period consisting of twelve consecutive months
What is a fiscal year?
Accounts receivable that cannot be collected; bad debt
What are uncollectible accounts?
An initial cash payment made when something is bought on credit
What is a down payment?