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• Accounts Payable refers to indebtedness that arises from the purchase of goods, materials, supplies, or services in the normal course of business operations
• Accounts Receivable are amounts due from customers arising from credit sales or credit services
• Accrual Principle requires that revenue should be recorded in the period it is earned, regardless of the time the cash is received, and the same applies to expenses
• Accrued Expenses are expenses already incurred but not yet paid, including Salaries Payable, Rent Payable, Utilities Payable, Interest Payable, and other unpaid expenses
• An Account is used to monitor the inflow and outflow of money to track the activities and spending of a business
• Assets are the economic resources of value owned by a business, including properties and other valuable items
• Business Entity Principle states that a business is considered a separate entity from the owner(s) and should be treated separately
• Chart of Accounts is a list of accounts used to record transactions before they are entered into the journal
• Conservatism principle states that in valuing business transactions, the amount recorded should be the lower value rather than the higher value
• Contra Assets are asset accounts with credit balances, representing assets with negative effects such as damaged machinery or doubtful debts
• Cost of Sales, also known as Cost of Goods Sold, represents the value of items sold to customers before any markup
• Depreciation Expense refers to the portion of the cost of fixed assets used for the operations of the reported period
• Double Entry Bookkeeping ensures that the books are balanced by monitoring credits and debits, treating them like a seesaw where one goes down, the other goes up
• Expenses are outflows of assets resulting from cash spent or liabilities incurred to produce revenue, decreasing owner’s equity
• External Users, such as employees, managers, and owners, are external parties who look at a business's information
• Financial Information records financial transactions, classifies them, and finalizes their results for a specified period of time
• GAAP stands for Generally Accepted Accounting Principles, a set of rules governing the application of accounting procedures
• Income or Revenue refers to inflows of assets resulting from the sale of goods or services, increasing owner’s equity
• Intangible Assets are assets without physical substance, like franchise, copyright, trademark, and lease rights
• Internal Users, such as employees, managers, and owners, are parties inside the company interested in accounting information
• Inventories are assets held for sale in the normal operations of a business, with service businesses normally not having an inventory account
• Liabilities are economic or legal obligations that a business owes to other businesses or individuals
• Non-Current Liabilities are long-term obligations expected to be settled beyond one year
• Objectivity Principle requires recorded business transactions to have impartial supporting evidence or documentation, and bookkeeping should be free of bias and prejudice
• Prepaid Expenses are expenses paid in advance, initially assets that become expenses over time
• Quantitative Information includes numerical data that can be represented and measured numerically
• Sales Discounts are contra assets that reduce the amount paid by customers for early payment
• Sales Return & Allowances are contra-revenue accounts representing deductions to Sales, with returns for defective items and allowances for items kept at a reduced price
• Tangible Assets are physical assets with value, such as cash, supplies, and furniture
• Unearned Revenues represent advanced payments from customers requiring settlement through the delivery of goods or services in the future