Accounting
The process of keeping and interpreting financial records.
Accounting System
The methods and procedures used in consistently handling the business's financial information.
Accounts Payable
Accounts Payable are liabilities of a business and represent money owed to others.
Accounts Receivable
Assets of a business and represent money owed to a business by others
Accrual accounting method
A method of accounting that records transactions at the time they occur even if no money changes hands at the time
Assets
What a company owns
Balance sheet
Provides a snapshot of a business' assets, liabilities, and equity on a given date.
Cash accounting method
An accounting method in which income and expenditures are recorded at the time the money changes hands
Credit
To enter an amount on the right side of an account. Normal entries to revenue accounts are credits. Liabilities normally have credit balances
Debit
A balance on the left side of an account in the general ledger. Typically expenses, losses, and assets have debit balances
Equity
Equity is the value of the owner’s investment in the business. Equity = Assets – Liabilities
Income Statement
A Financial Statement documents the difference in revenue and expenses resulting in income
Liabilities
What a company owes
Managerial Accounting
A type of accounting that involves preparing and reporting financial data to internal users, usually managers, who need financial information to control day-to-day operations and to make financial decisions and plans affecting the business
