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.