Accounting Terminologies
Adjusted Trial Balance
Trial balance prepared before adjustments.
Unadjusted Trial Balance
Trial balance prepared before adjustments.
Adjusting Entries
Final balance of an account after postings.
Ledger Balance
Final balance of an account after postings.
Debit Column
Column for debit balances.
Credit Column
Column for credit balances.
Trial balance prepared before adjustments.
Unadjusted Trial Balance
Trial balance prepared before adjustments.
Adjusting Entries
Final balance of an account after postings.
Ledger Balance
Final balance of an account after postings.
Debit Column
Column for debit balances.
Credit Column
Column for credit balances.
Income Statement
A financial statement showing revenues, expenses, and profit or loss for a period
Revenue
A financial statement showing revenues, expenses, and profit or loss for a period
Expense
Cost incurred to earn revenue
Net Income
Excess of revenue over expenses
Net Loss
Excess of expenses over revenue
Accounting Period
The time period covered by the financial statement
A financial statement showing revenues, expenses, and profit or loss for a period
Revenue
A financial statement showing revenues, expenses, and profit or loss for a period
Expense
Cost incurred to earn revenue
Net Income
Excess of revenue over expenses
Net Loss
Excess of expenses over revenue
Accounting Period
The time period covered by the financial statement
Balance Sheet
A financial statement showing assets, liabilities, and equity at a specific date.
Assets
Resources owned or controlled by a business.
Liabilities
Obligations or debts owed to others.
Equity
Owner’s claim on the business.
Current Assets
Assets expected to be used within one year.
Current Liabilities
Obligations due within one year.
Accounting Equation
Assets = Liabilities + Equity
A financial statement showing assets, liabilities, and equity at a specific date.
Assets
Resources owned or controlled by a business.
Liabilities
Obligations or debts owed to others.
Equity
Owner’s claim on the business.
Current Assets
Assets expected to be used within one year.
Current Liabilities
Obligations due within one year.
Accounting Equation
Assets = Liabilities + Equity
Statement of Owner’s Equity
A financial statement showing changes in owner’s capital over a period.
Beginning Capital
Owner’s capital at the start of the period.
Additional Investment
Extra money invested by the owner.
Net Income
Profit earned during the period.
Drawings
Withdrawals made by the owner for personal use.
Ending Capital
Owner’s capital at the end of the period.
A financial statement showing changes in owner’s capital over a period.
Beginning Capital
Owner’s capital at the start of the period.
Additional Investment
Extra money invested by the owner.
Net Income
Profit earned during the period.
Drawings
Withdrawals made by the owner for personal use.
Ending Capital
Owner’s capital at the end of the period.
Statement of Cash Flows
A financial statement showing cash inflows and outflows during a period
Cash Inflow
Cash received by the business
Cash Outflow
Cash paid out by the business
Operating Activities
Cash flows from main business operations
Investing Activities
Cash flows related to buying or selling long-term assets
Financing Activities
Cash flows related to owner investment and loans
Net Cash Flow
Difference between cash inflows and outflows
A financial statement showing cash inflows and outflows during a period
Cash Inflow
Cash received by the business
Cash Outflow
Cash paid out by the business
Operating Activities
Cash flows from main business operations
Investing Activities
Cash flows related to buying or selling long-term assets
Financing Activities
Cash flows related to owner investment and loans
Net Cash Flow
Difference between cash inflows and outflows
Financial Statements
Formal records showing a business’s financial performance and position
Income Statement
Statement showing revenues and expenses
Statement of Owner’s Equity
Statement showing changes in capital
Balance Sheet
Statement showing assets, liabilities, and equity
Adjusted Trial Balance
Trial balance prepared after adjustments
Net Income
Profit for the period
Ending Capital
Final capital balance transferred to balance sheet
Formal records showing a business’s financial performance and position
Income Statement
Statement showing revenues and expenses
Statement of Owner’s Equity
Statement showing changes in capital
Balance Sheet
Statement showing assets, liabilities, and equity
Adjusted Trial Balance
Trial balance prepared after adjustments
Net Income
Profit for the period
Ending Capital
Final capital balance transferred to balance sheet
Closing Entries
Journal entries made at period-end to reset temporary accounts
Temporary Accounts
Accounts closed each period | revenues, expenses, drawings
Permanent Accounts
Accounts that carry balances forward | assets, liabilities, capital
Income Summary
Temporary account used to close revenues and expenses
Net Income
Excess of revenues over expenses
Net Loss
Excess of expenses over revenues
Journal entries made at period-end to reset temporary accounts
Temporary Accounts
Accounts closed each period | revenues, expenses, drawings
Permanent Accounts
Accounts that carry balances forward | assets, liabilities, capital
Income Summary
Temporary account used to close revenues and expenses
Net Income
Excess of revenues over expenses
Net Loss
Excess of expenses over revenues
Post-Closing Trial Balance
A list of permanent account balances after closing entries
Closing Entries
Entries that close temporary accounts
Permanent Accounts
Accounts that carry forward to the next period
Temporary Accounts
Revenue, expense, and drawings accounts
Accounting Period
A specific time period for financial reporting
Debit Balance
Balance on the left side
Credit Balance
Balance on the right side
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A list of permanent account balances after closing entries
Closing Entries
Entries that close temporary accounts
Permanent Accounts
Accounts that carry forward to the next period
Temporary Accounts
Revenue, expense, and drawings accounts
Accounting Period
A specific time period for financial reporting
Debit Balance
Balance on the left side
Credit Balance
Balance on the right side
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