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 Accounts Payable (AP)-money
you owe to vendors for services or goods purchased, e.g. the balance
of unpaid or partially paid supplies bills.
Accounts Receivable (A/R)-money customers owe you for services
or goods you’ve sold, e.g. the balance of unpaid or partially
paid invoices already sent.
Accrual-tracks transactions that may not yet have affected
cash; income is counted when an invoice is created and expenses
are incurred when a bill is created-regardless of when the actual
cash is exchanged.
Assets-anything owned by your business that has a cash
value. This is typically used to classify large purchases or cash
deposits, e.g. furniture, equipment and bank accounts.
Balance Sheet Accounts-a snapshot at a specific point in
time of accounts with balances, e.g. assets, liabilities, and bank
accounts.
Bank Account-accounts that hold funds and is subject to
deposits and withdrawals
Chart of Accounts-a listing of accounts used to categorized
and monitor money coming in to and out of businesses; types include
income, expenses, asset, liability and equity categories.
Cost of Goods (COGS)-the amount spent to buy raw materials
needed to produce and finished products you sell.
Credit Memos-transactions that reduce or eliminate the
amount that customers owe you, e.g. when goods are returned.
Current Liability-a liability, or money you owe, that must
be paid within one year. Current liability can also be referred
to as a short-term liability.
Depreciation-the amount an asset decreases in value over
a period of time.
Equity-the value of ownership in a business. Assets minus
Liabilities=Equity
Expense-money spent on goods and services to run your business,
e.g. electricity, supplies and services
Finished Goods-products that are complete and ready for
sale (no assembly required from your business)
Fixed Asset-tangible (something you can touch) assets that
is not likely to be sold or used within one year. Typically the
include large furniture and equipment purchases over $500
General Ledger-a record of every transaction within a period
of time you specify
Income-money your business receives from your customers
through normal business activities
Liabilities-anything a business is obligated to pay. Typically,
this includes accounts payable, credit card balances and loans owed
Long-Term Liability-liabilities or money you owe that are
not likely to be paid within one year. Typically includes items
such as long-term bank loans, remaining leases, future employee
benefits and deferred taxes
Other Assets-an asset that is neither a current nor fixed
asset.
Other Current Assets-assets that is likely to be used or
sold within one year. Account Receivables is a current asset; others
include cash and prepaid expenses
Other Expenses-expenses from activities that are not part
of a business’ main practice, e.g. one-time fees
Other Income-income from activities that are not part of
a business’ main practice, e.g. investments and sales of assets
Profit & Loss-total of financial transactions over
a period of time, e.g. income, expenses and cost of goods sold.
Illustrate how and why you are profitable during a specified period
of time by summarizing where money has come from an gone out to
in operating your business
Purchase Order (PO)-a transaction used to place an order
for goods or services
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