Accounts payable
Amounts a business must pay in the future
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| Term | Definition |
|---|---|
| Accounts payable | Amounts a business must pay in the future |
| Accounts receivable | Claims for future collection from customers. |
| Assets | Property owned by a business. |
| Balance sheet | A formal report of a business’s financial condition on a certain date; reports the assets, liabilities, and owner’s equity of the business. |
| Break even | A point at which revenue equals expenses. |
| Business transaction | A financial event that changes the resources of a firm. |
| Capital | Financial investment in a business; equity. |
| Equity | An owner’s financial interest in a business. |
| Expense | An outflow of cash, use of other assets, or incurring of a liability. |
| Fair market value | The current worth of an asset or the price the asset would bring if sold on the open market. |
| Fundamental accounting equation | The relationship between assets and liabilities plus owner’s equity. Assets = Liabilities + Owner's Equity |
| Income statement | A formal report of business operations covering a specific period of time; also called a profit and loss statement or a statement of income and expenses. |
| Liabilities | Debts or obligations of a business |
| Net income | The result of an excess of revenue over expenses. |
| Net loss | The result of an excess of expenses over revenue. |
| On account | An arrangement to allow payment at a later date; also called a charge-account or open-account credit. |
| Owner’s equity | The financial interest of the owner of a business; also called proprietorship or net worth. |
| Revenue | An inflow of money or other assets that results from the sales of goods or services or from the use of money or property; also called income. |
| Statement of owner’s equity | A formal report of changes that occurred in the owner’s financial interest during a reporting period. |
| Withdrawals | Funds taken from the business by the owner for personal use. |