Ch 2 - Analyzing Bus Trans VOCAB Flashcards
Define accounts payable.
amounts a business must pay in the future
Define accounts receivable.
Claims for future collections for customers.
Define assets.
Property owned by a business
Define balance sheet. (2)
- formal report on a business’s financial condition on a certain date
- reports the assets, liabilities and equity of the business
Define break even.
A point at which revenue equals expenses
Define business transaction.
a financial event that changes the resources of a firm.
Define capital. (2)
- financial investment in a business
2. aka - equity
Define equity.
owner’s financial interest in a business.
Define expense. (3)
- outflow of cash,
- use of other assets, or
- incurring of a liability
Define fair market value. (2)
- current worth of the asset
2. price the asset would bring if sold on the open market
Define fundamental accounting equation.
relationship between assets and liabilities plus owner’s equity
Define income statement. (3)
- formal report of business operations covering a specific period of time
- aka: profit and loss statement
- aka: statement of income and expenses
Define liabilities.
debts or obligations of a business
Define net income.
result of an excess of revenue over expenses
Define net loss
result of an excess of expenses over revenue
Define on account. (3)
- arrangement to allow payment at a later date
- aka: charge account
- aka: open-account credit
Define owner’s equity. (3)
- financial interest of the owner of the business
- aka: proprietorship
- aka: net worth
Define revenue. (2)
- inflow of money or other assets that results from the sales of goods or services or from use of money or property
- aka: income
Define statement of owner’s equity.
formal report of changes that occurred in the owner’s financial interest during a reporting period
Define withdrawals.
funds taken from the business by the owner for personal use.
