Vocab
The process of recording, maintaining, and reporting an organization’s financial transactions and records.
Accounting
Determine the missing amount from the situation given below:
Assets = Liabilities + Equity $125,000 = $95,000 + $???
$30,000
An accounting method that states revenues and expenses are recognized and recorded at the time they are earned or incurred, even if money doesn’t change hands.
Accrual Accounting Method
The _________________ is often referred to as the balance sheet equation since it highlights the structure of the balance sheet.
Accounting Equation
A tangible or intangible resource that has economic value, owned by a person or organization.
Asset
Focuses on the management of the assets, liabilities, and cash flow of an organization, financial analysis like ROI and ROE, and financial planning of future growth.
Finance
The following is an example of a liability:
A - Accounts Receivable (money owed to the business from customers)
B - Inventory
C - Loan
D - Revenue
C - Loan
An accounting method that states revenues and expenses are recognized and recorded when cash actually changes hands.
Cash Accounting Method
A record in the accounting system that tracks the increases, decreases, and current balance of a specific asset, liability, equity, revenue, or expense is called a/an:
Account
The financial claims on a company’s assets.
Equities
Value of a company, calculated by multiplying the number of outstanding shares by the current stock price.
Market Capitalization
A business owned by one person, and the owner has unlimited liability, meaning the owner can lose more than they invested in the business.
Sole Proprietorship
A financial statement that marks a company's financial situation at a moment in time, showing all assets, liabilities and owners’ equity.
Balance Sheet
Tasia started T&G Baking on March 4th, If Tasia invests $2,400 into her business on March 4th, and then, purchases $300 of equipment with cash on March 5th; $550 of supplies on account on March 10th; and pays $300 on account on March 12th; what is the cash account balance on March 12th? These are the only transactions that have been incurred so far.
$1800
A debt or obligation owed to any other person or organization.
Liability
A commonly-followed set of accounting rules, standards, and procedures for reporting financial information to external users.
Generally Accepted Accounting Principles (GAAP)
On December 5th, Jerri Jackson started a new business that provides dance lessons to ederly adults in nursing homes. On December 5th Jerri invested $750 of her own money into the business. And then she invested another $564 on December 10th. What account is used to record Jerri’s investment and what is its account balance on December 10th?
Jerri Jackson, Capital; $1,314
The person or organization to whom a debt or obligation is owed.
Creditor
Shaun & Co Landscaping paid cash for their annual insurance premium in the amount of $1,200 on July 9th. What two accounts will Shaun use to record this transaction?
Cash; Prepaid Insurance
The owner’s rights to the assets of a business after all liabilities have been paid.
Owners’ Equity
The government regulatory agency responsible for policing the US financial markets.
Securities and Exchange Commission (SEC)
Johnathan Milken is starting a lawn care company. He needs to purchase a $4,000 lawn mower but he only has $1,500 saved up to invest in the company. In order to purchase the lawn mower, he borrows the remaining money he needs from his father. After purchasing the lawn mower, what is the accounting equation of Jonathan’s lawn care company?
$4,000 = $2,500 + $1,500
The difference between an individual's assets and liabilities.
Net Worth
During the month of June, JJ Cleaning completed the following transactions: $1,320 investment by Jeremiah Jones into his business, purchased $285 of supplies on account, purchased $150 of supplies with cash, purchased $540 of insurance with cash, paid $33 on account, purchased $532 of equipment on account. These are the only transactions that have been incurred so far. What is the cash account balance at the end of June?
$597
The net or cumulative difference of all increases and decreases of an account, e.g. the current balance.
Account Balance