Assets
resources owned by a business
Summary: money and other valuables belonging to an individual or business
Example: Investments, Accounts Receivable, Inventories, Prepaid Expenses (and other current), Property, Plant, and Equipment
Liabilities
debts and obligations
Summary: obligations arising from past transactions and payable in assets or services in the future.
Ex:
Stockholders Equity
common stock and retained earnings
Summary:
Ex: Capital
Accounting Equation
Assets = Liabilities + Owner's Equity
Summary: An equation showing the relationship among assets, liabilities, and owner's equity
Ex:
Systems of Debits and Credits
Left side is always Debit
Right side is always Credit
Revenue
Income
Summary: An increase in owner's equity resulting from the operation of a business
Ex:
Expenses
All inputs that has expenses
Summary: 1. the costs of doing business that are necessary to earn revenue
Summary: 2. decreases in net assets resulting from usual operating activities
Ex: Wages Expenses
Income statement
A financial statement showing the revenue and expenses for a fiscal period.
Income Statement Equation: Revenues - Expenses = Net Income
Balance Sheet
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
Balance Sheet Equation: Assets = Liabilities + Owner's Equity
Current Assets
items that can or will be converted into cash within one year
Summary: cash and other assets expected to be exchanged for cash or consumed within a year
Ex:
Liquidity
the ease with which an asset can be converted into cash
Summary: the ease with which an asset can be converted into the economy's medium of exchange
Long Term Assets
assets that are expected to be used in business operations for longer than one year
Ex: property, plant, and equipment, land, buildings, vehicles, furniture, and fixtures that a company uses (capital expenditures/investments)
-consist of brand names, copyrights, patents, and trademarks that a company acquires
-other long term assets: resources, Intangible Assets
ex: long-term marketable securities
Stock Holders Equity
The owners' claim to assets, common stock and retained earnings
Gross Profit
net sales - cost of goods sold (COGS)
the excess of net sales over the cost of goods sold
Cash Discounts (Sales Discounts)
offered to induce prompt payment (to encourage prompt payment)
Invoice Price
amount the dealer paid to buy the car from the manufacturer
Fiscal Year
A fiscal period consisting of 12 consecutive months.
Purchase Return
a return of goods from the buyer to the seller for cash or credit
Retailers
businesses that sells to the final consumers
Sale On Credit
Payment at a later date
Wholesaler
Intermediaries who help to move goods between producers and retailers by buying goods from producers and selling them to retailers
Acquisition Price
The amount paid to a vendor or contractor for the goods or services obtained.