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KEYS TO UNDERSTANDING FINANCIAL REPORTS
An equation showing the relationship among assets, liabilities, and owner's equity
Money an organization owes its vendors and suppliers.
a planned process for providing financial information that will be useful to management.
A name given to each item exchanged
property or items of value owned by a business, Resources a business owns or controls that are expected to provide current and future benefits to the business.
FUNDAMENTAL ACCOUNTING EQUATION
Assets = Liabilities + Owner's Equity
the actual amount paid for merchandise or other items bought is recorded
The amounts a BUSINESS owes to a CREDITOR
Short-term or long-term liabilities that a business promises to repay by a certain date.
the amount remaining after the value of all liabilities is subtracted from the value of all assets.
funds that flow into a business from the sale of goods or services
SEPARATE ENTITY ASSUMPTION
Activities of the business are separate form activities of the owners.