Accounting Basics Vocabulary

Accounting Basics Vocabulary Accounting Equation - Assets= Liabilities + Owner's Equity Financial Statements - Documents that summarize the changes resulting from business transactions that occur during an accounting period. Accounts Receivable - The total amount of money owed to a business. Accounting - The systematic process of recording and reporting the financial position of a person or an organization. The accounting system is designed to collect, record, and report financial transactions that affect the operation of a business. Accounts Payable - Represents the short-term liabilities that a business owes to creditors. Assets - Property and other items of value owned by a business. (They are either current or fixed) Balance Sheet - A report of the balances in all assets, liability, and owner's equity accounts at the end of an accounting period. Cash Flows - The money that is available to a business at any given time. Generally Accepted Accounting Principles (GAAP) - The general guidelines and principles, standards and detailed rules, plus industry practices that exist for all accountants to use for financial reporting. Income Statement - A report of the revenue, expenses, and net income or net loss over an accounting period. Liabilities - Creditors' claims to the assets of a business. Equity - The present value of an asset less all claims against it. Property - Anything of value that is owned or controlled. Owner's Equity - An owner's claim to the assets of the business. Statement of Cash Flows - A financial report that shows incoming and outgoing money during an accounting period.