Chapter 21 Vocab Flashcards
Assets
anything of value that you own
Liabilities
total amount of money that you owe to creditors
Owner’s Equity
the difference between your assets and your liabilities
Net Worth
the amount by which your assets exceed your liabilities
Capital
the amount of your owner’s equity
Balance Sheet
a statement that shows your total assets, total liabilities, and owner’s equity
Cost of Goods Sold
it’s equal to the value of the beginning inventory plus the cost of any goods received minus the value of the ending inventory
Income Statement/Profit-and-loss Statement
a statement that shows in detail the income and operating expenses of a business
Net Income/Net Profit
any money left over after expenses have been deducted from gross profits
Current Ratio
the ratio of total assets to total liabilities
Quick Ratio/Acid-Test Ratio
the ratio of total assets minus inventory to total liabilities
Horizontal Analysis
the comparison of two or more income statements for different periods
Base Figure
when comparing income statements, the dollar amount on the earlier income statement
Amount of Change
the difference between the base figure on an earlier statement and the corresponding figure on the current statement
Accounting Equation
Assets = Liabilities + Equity
