Accounting Terminology Flashcards
Often called the language of business and is used to measure, record, report, and interpret the financial assets of the business
Accounting
Accounting = liabilities+owner’s equity. Accounting is based on the __ of this equation
Accounting equation
Logic
Money that you owe to regular business creditors
Accounts payable
Money that is owed to you from other customers
Accounts receivable
Things which accumulate either as assets or equities. In ____ accounting net profit is measured by the difference between revenues and expenses, not increases or decreases in cash.
Accrual
Accrual
Process of gradually paying off a liability over a period of time
Amortization
In accounting, something of value in monetary terms.
Assets
Shows the assets, liabilities, owner’s equity at a given moment in time. The fundamental accounting equation of assets = liability+ owner’s equity must always balance
Balance sheet
____ is the same as expenditures
Capitalization
Money in the till or the bank
Cash
Source and application of funds. The actual movement of cash within a business: cash inflow - cash outflow
Cash flow
aka cost of production
Cost of goods sold
Inventory at the beginning of the accounting period, plus new inventory purchases, plus labor and other associated production costs, minus inventory at the end of the accounting period
Cost of goods sold
Cash or other assets that can be converted into cash within one year
Current assets
Money you owe that will be ordinarily paid within one year
Current liabilities
Reduction in the useful value of fixed assets due to wear and tear, passage of time, and obsolescence
Depreciation
Profit made this year but not yet distributed
Earnings year-to-date
There are basically 2 kinds of equities (claims against assets): claims of lenders or creditors which are liabilities, or claims or rights that owner has to the assets called owner’s ____
Equities
Costs of doing business other than those related to production. ___ result in a decrease in owner’s equity.
Expenses
Costs that increase fixed assets and will not be consumed within one year
Expenditures
First in, first out. A method of accounting for inventory.
FIFO
Property, plant, and equipment. Things not normally intended for sale, which are used over and over again
Fixed assets
Operating expenses that tend to remain constant regardless of variations in the volume of sales; for example, real estate taxes, property insurance, and depreciation on buildings.
Fixed costs
Summaries the revenues and expenses of a company over a period of time, and reflects the difference between the 2 as a profit or a loss (also called the ____ ____).
Income statement
P and L statement
Patients, good will, logo, trademark, franchises
Intangible asset
A rental contract
Lease
Debts and accounts that are payable
Liabilities
Last in, first out. Method of accounting for inventory.
LIFO
Ease with which assets can be converted into cash
Liquidity
Money owed that will not be repaid during that year, for example, a mortgage.
Long-term liabilities
If you are buying on credit it is an account payable if you sell on credit it is an account receivable.
On account
Your own money that was used to start the company.
Original investment
This is the part of the assets that the owner has claims to after all the liabilities are paid
Owner’s equity
Payments made in advance for which the company has not yet received the benefits
Prepaid expenses
The bottom line. What is leftover after paying all expenses including taxes
Profit
Sales minus cost of goods sold
Gross profit
Gross profit minus expenses
Net profit
Net profit is aka
Net income
A method of allocating the estimated net cost of a fixed asset in equal amounts over a set period of time
Straight line depreciation
Money owed to the government for taxes
Tax liabilities
Expenses which are directly related to the volume of sales, for example, manufacturing labor, raw materials, and sales costs
Variable costs
