FA 1-6 Flashcards
Accounting Term
Definition
Balance Sheet
Snapshot of assets, liabilities, and equity at a given point in time.
Income Statement
Report summarizing revenues and expenses over a period, showing profit or loss.
Cash Flow Statement
Statement showing inflows and outflows of cash from operating, investing, and financing activities.
Equity
Owners’ claims on the company’s assets after liabilities are paid.
Liabilities
Obligations the company owes to outside parties.
Assets
Resources owned by a company with future economic benefits.
Revenue
Income earned from providing goods or services.
Expenses
Costs incurred in earning revenue, such as salaries or rent.
Retained Earnings
Accumulated net income retained by a company for reinvestment.
Accrued Liabilities
Liabilities for expenses incurred but not yet paid.
Notes Payable
Promissory notes signed by a borrower, promising to pay a specific amount.
Accounts Payable
Amounts the company owes to suppliers for purchases on credit.
Inventory
Goods held for sale to customers.
Prepaid Expenses
Expenses paid in advance, like insurance or rent.
Property, Plant, and Equipment (PPE)
Long-term assets used in operations, such as buildings and machinery.
Share Capital
Investment made by shareholders into the company through stock purchase.
Intangible Assets
Non-physical assets like patents or trademarks.
Auditor’s Report
Document providing opinion on the fairness of financial statements.
Going Concern
Assumption that the business will continue operating into the future.
Current Ratio
Liquidity ratio indicating ability to pay short-term obligations.
Depreciation
Allocation of asset cost over its useful life.
FIFO
First-in, first-out inventory valuation method.
LIFO
Last-in, first-out inventory valuation method.
Double-entry System
System where every transaction has a debit and credit entry.
Journal Entry
Recording of a transaction in the accounting records.
T-account
Tool used to represent and analyze individual account changes.
Cost of Goods Sold (COGS)
Direct costs of goods sold to generate revenue.
Gross Profit
Revenue minus COGS, showing gross earnings.
Net Income
Total profit after all expenses are deducted from revenue.
Trial Balance
Listing of all accounts to check for balanced debits and credits.
Working Capital
Current assets minus current liabilities; shows operational liquidity.
Deferred Revenue
Cash received in advance for goods or services not yet provided.
Deferred Expense
Expenses incurred but recognized later, such as depreciation.
