vocab 1
a business activity that changes assets, liabilities, or owners equity
what is a transaction?
method of accounting the includes all information
What is the accrual method of accounting?
this is accounted for as raw materials, goods in process, and finished products.
What is inventory?
money flowing out of an account
What is a credit?
your own money that was used to start the company
What is original investment?
Money that is owed to you from your customers
What are accounts receivable?
summarizes the revenues and expenses of a company over a period of time, and reflects the differences between the two as a profit or a loss. Also called a P&L statement
What is an income statement?
money flowing into an account
What is a debit?
costs of doing business other than those related to production.
What are expenses?
show the assets, liabilities, and owner's equity at a given moment in time
What is a balance sheet?
payments made in advance for which the company has not yet received the benefits
What are prepaid expenses?
gross profit minus expenses
What is net profit?
the side of a t account that is increased
What is normal balance?
Money that you owe to a regular business
What are accounts payable?
sales minus cost of goods sold
What is gross profit?
often called the language of business and is used to measure, record, report, and interpret the financial aspects of business
What is accounting?
a method for valuing inventory, first in first out
What is FIFO?
assets = liabilities + owner's equity
What is the accounting equation?
a method of valuing inventory, last in first out
What is LIFO?
the total cumulative net profit that a business earns over its life, and not yet distributed
What are retained earnings?