Midterm - Accounting Flashcards
Accounts Payable (A/P)
expenses that a business has incurred but has not yet paid
Accounts Receivable (A/R)
money thats flowing into a business thats not received yet
Accrued Expense
an expense that the business has incurred but has not yet paid
Asset
own
Equity
worth
Revenue
incoming money (increase in assets or decrease in liability)
Cash Flow
movement of the money you receive and the money you spend
Common Stock (C/S)
ownership exchange for cash
Retained Earnings (R/E)
leftover net income that goes into shareholders equity
Notes Payable (N/P)
a written promise made by the business to pay a debt, usually involving interest, in the future
Creditors
lend financial resources to businesses (bank)
Interest
the cost of borrowing money
Investors are Called
stockholders
Liability
the obligations a business has
Investors
provide financial resources in exchange for ownership interests in businesses
Stockholders Equity
the businesses commitment to the stockholders
Expense
an economic sacrifice a business incurs in the process of generating revenue
Dividend
the distribution of assets generated through earnings
General Ledger
the complete collection of a company’s accounts
Income Statement
matches revenue (benefits) with the expenses (sacrifices) that were incurred to generate revenue
Net Loss
when expenses are greater than revenue
Net Income
revenues exceeds expenses
Balance Sheet
the accounting equation
Liquidity
is measured by how fast an asset can be converted into cash
Statement of Cash Flows
how a company obtained and used cash during accounting period
Permanent Account
balance sheet account
Temporary Account
revenues, expenses and dividends are held here
Salaries Payable
what you owe your employees but not have yet paid
Period Costs
the period when selling and administrative costs are incurred
Selling and Administrative Costs
costs that are not included in inventory
Product Costs
the inventory costs
Cost of Goods Sold (COGS)
the inventory and expense account
Gross Margin/Gross Profit
the difference between the sales revenue and the cogs
Shrinkage
decreases in the inventory due to customers (shoplifters, stolen inventory or misplaced inventory)
Gain
the difference between the sales price and the cost of the land
Debit
an entry recorded for a payment made/owed
Credit
entry records decrease in assets or increase in liability, decrease in expense, increase revenue
FOB
freight on board
FOB Shipping Point
buyer (buyer pays for shipping)
FOB Shipping Destination
seller (seller pays for shipping)
Seller =
expense
Inventory Buyer =
inventory account (cost of shipping that goes to shipping)
Operating Income
amount of income that is generated from the normal recurring operations of a business
Single-Step Income Statements
revenues - expenses
Multi-Step Income Statement
income statements that show additional relationships
Net Sales
also known as sales discounts
GAAP
General Accepted Accounting Principle
