The accounting game summary
Chapter 1:
Liabilities: what you owe others
Owners equity: what is yours
Assets: what we have (owners equity + liabilities)
Inventory: raw materials, goods in process, and finished goods (considered assets)
Notes payable: loans (payments with structures, contracts)
Accounts payable: something you pay each month (supplier)
Gross profit = sales – costs of goods sold
Sales $25
Costs of goods sold $10
Gross profit $15
Gross profit adds up to the owners equity
Profit indicates left over money after all expenses have been paid
Chapter 2:
Income statement: where money comes and goes
Costs of goods sold: our products
Sales: how income is generated
Gross profit = sales – costs of goods
Net profit: actual profit (also referred to as the bottom line)
Sales Sales $25
-Cost of goods sold (COGS) -COGS $10
= gross profit =gross profit $15
-Expenses -expenses $5
= net profit = net profit $10
Accounting period: the time in which the income statement takes place
General ledger: software or machine which keeps track of everything that happens
Chapter 1:
Liabilities: what you owe others
Owners equity: what is yours
Assets: what we have (owners equity + liabilities)
Inventory: raw materials, goods in process, and finished goods (considered assets)
Notes payable: loans (payments with structures, contracts)
Accounts payable: something you pay each month (supplier)
Gross profit = sales – costs of goods sold
Sales $25
Costs of goods sold $10
Gross profit $15
Gross profit adds up to the owners equity
Profit indicates left over money after all expenses have been paid
Chapter 2:
Income statement: where money comes and goes
Costs of goods sold: our products
Sales: how income is generated
Gross profit = sales – costs of goods
Net profit: actual profit (also referred to as the bottom line)
Sales Sales $25
-Cost of goods sold (COGS) -COGS $10
= gross profit =gross profit $15
-Expenses -expenses $5
= net profit = net profit $10
Accounting period: the time in which the income statement takes place
General ledger: software or machine which keeps track of everything that happens
