Business Quiz Unit 9 – Flashcards
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Accounting Records
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daily bookkeeping journals of a business used to prepare Financial Statements.
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Accounting Period
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span of time which is represented on the financial statements. usually quarterly or annually.
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Fiscal year
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Twelve Month period chosen by company to prepare its financial statements. Most companies use the 12 months ending December 31
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Basic Accounting Equation
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Assets = Liabilities + Owners/Shareholders Equity.
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Debit
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Accounting entry that represents an increase in assets or decrease in liabilities or owners equity.
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Credit
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Accounting entry that represents a decrease in assets or increase in liabilities or owner's equity
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GAAP
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Generally accepted accounting principles. Standards developed by the accounting industry to make sure all companies prepare its respective financial statements the same way and with the same terminology. The purpose of these standards is to make comparison of companies' performance easier
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Cash Basis Accounting
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method of recording transactions only when cash is paid or recieved
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Accrual Basis Accounting
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Method or recording transactions when cash is due or owed but before it is paid or received.
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Financial Statements
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Summary of financial transactions of a business to show its current financial position. Indicates how well or poorly a business is doing.
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Audited Statements
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a business's financial statements that are reviewed and approved by an outside accountant or certified public account. Usually done once a year for public companies.
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Income Statement
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a report in a business' financial statements. Shows net income or net loss during an accounting period
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Revenue/Sales
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A section of an income statement, shows total amount of money earned by a business
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Gross Profit on Sales
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Money made on a sale of merchandise after deducting the cost of that merchandise to the business selling it but before operating expenses/
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Net income
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Amount of Revenue remaining after cost of goods sold and expenses are deducted
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Balance Sheet
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a report in a business' financial statement. Shows assets, liabilities, and owners/shareholders equity at the end of an accounting period
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Assets
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current value of things a business owns including cash
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Accounts Recievable
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money that a business has billed for (owed) but has not yet recieved
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Liabilities
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debt or money that a business owes. Short term is less than a year, long term is over a year
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Accounts payable
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money that a business has been billed for (owe) but hasn't yet paid it
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Owners/Shareholders Equity
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represents net liquidation value of a business. Formula is assets minus Liabilities.
