Entrepreneurship - Chapter 9

accounts payable

Amounts owed by a business to its vendors for merchandise purchased on credit

transaction

Any business activity that changes assets, liabilities, or net worth

balance sheet

a financial statement that lists what a business owns, what it owes, and how much it is worth at a particular point in time

income statement

a financial statement that shows the business's revenues and expenses incurred over a period of time and the resulting profit or loss

payroll

a list of people who receive salary or wage payments from a business

journals

accounting records of the transactions you make; there are five different types that businesses use to record their transactions: sales, cash payments, cash receipts, purchases, and general

liabilities

amounts you owe to others

account

an accounting record that provides financial detail for a particular business item, such as for cash, sales, rent, and utilities

cash flow statement

an accounting report that describes the way cash flows into and out of a business over a period of time

check register

booklet in which an account holder records the dates and amounts of the checks as well as the names of people or businesses to whom he or she has written the checks

net worth (owner's equity)

difference between what is owned, called assets, and what is owed, called liabilities

assets

items of value that you own

equity capital

money invested in a business in return for a share in the profits of the business

debt capital

money loaned to a business with the understanding that the money will be repaid within a certain time period, usually with interest

collateral

property that a borrower forfeits to the bank providing the loan if he or she defaults on the loan

accounts receivable

the amounts owed to a business by its credit customers

debt-to-equity ratio

the relation between the dollars borrowed (debt) and the dollars invested in a business (equity)