A listing of every financial statement and its current balance.
Amounts a business must pay in the future.
Funds taken from a business by the owner for personal use.
A point at which revenue equals expenses.
Statement of Owner's Equity
A formal report of changes that occurred in the owner's financial interest during a reporting period.
A book of accounts into which the data from journal entries is posted.
The process in which revenues & expenses are recorded when they are earned or incurred regardless of when cash is exchanged.
A financial event that changes the resources of a firm.
A formal report of a business's financial condition on a certain date; reports the assets, liabilities, and owner's equity of the business.
A documented loan that requires period payments of principle and possible interest until the date of maturity.
The result of an excess in revenue over expenses.
Claims for future collection from customers.
An owner's financial interest in a business.
The process of recording transactions.
Fair Market Value
The current net worth of an asset or what the current asset would bring if sold at market value.
Revenues, expenses and dividends that are closed into retained earnings at the end of an accounting period.
The result of an excess of expenses over revenue.
A formal report of business operations covering a specific period of time; also called a profit and loss statement or a statement of income and expense.
The timing difference that occurs when revenue is earned or an expense is incurred before cash is exchanged.
Fundamental Accounting Equation
The relationship between assets and liabilities plus the owner's equity.
Assets, liabilities and owner's equity accounts that are NEVER closed.
For steps that are completed every accounting period, which include, recording transactions, adjusting, preparing financial statements and closing temporary accounts.
An arrangement to allow payment at a later date; also called a charge account or an open account credit.
A listing of all transactions during an accounting period. It is also includes what accounts are affected, the date, the amount and a brief description of the transaction.
The financial interest of the owner of the business; also called proprietorship or net worth.
The process of increasing or decreasing an account to its correct balance as of the balance sheet date.
The timing difference that occurs when cash is exchanged before revenue is earned or an expense is incurred.
Financial investment in a company; equity
Non GAAP method that records revenue and expenses only when cash is exchanged. This method is seldom used today because it does not accurately reflect the financial position of the company.
Requires that expenses are recorded in the same period s the revenue that they helped generate.
Specifies four criteria that must met for a company that follows GAAP to record revenue.