Acounting Chapter 1

Balance Sheet

A list of the assets, liabilities, & owners equity as of a specific date, usually at the close of the last day of the month or a year.

Accounting Equation

Assets = Liabilities + Owners Equity

Revenue

Business earns money by selling goods or services to its customers. Money you brought in

Manufacturing Business

Change basic inputs into products that are sold to customers

Account Receivable

Claim against the customer, it is an asset, & the revenue is earned & recorded as if cash had been received

Net Loss

If the expense exceed the revenue the excess is a net loss. You spend more than you have

Corporation

Organized under state or federal statutes as a separate legal taxable entity, it is the most formal

Proprietorship

Owned by 1 individual

Partnership

Owned by 2 or more individuals

Service Business

Provide service rather than products to customers

Assets

Resources owned by a business. Examples are cash, land, building, & equipment. The rights or claims to the assets are divided into 2 types. The rights of creditors, & the rights of owners

Merchandising Business

Sells products they purchase from other businesses to customers

Statement of owner's equity

Summary of the changes in the owner's equity that have occured during a specific period of time, such as a month or a year.

Income Statement

Summary of the revenue & expenses for a specific period of time

Net Income or Net Profit

The excess of the revenue over the expenses

Account Payable

The liability created by a purchase on an account

Liabilities

The rights of creditors are the debts of the business, called liabilities