Course Glossary

Course Glossary

 

account: a page used to record financial changes for each item affecting the financial position

 

accountancy: the work done by an accountant

 

accounting: the tracking and writing down of financial information

 

accounting equation: assets = liabilities + owner’s equity, or the left side of the balance sheet equals the right side of the balance sheet

 

accounts payable: money that the business still has to pay; debt that is owed

 

accounts receivable: money that the business will be receiving

 

asset: anything of value that is owned

 

auditing: the evaluation of books and records of a business

 

auditor: a professional accountant who deals with analysis of books and records

 

balance sheet: a financial statement that shows the value of the assets, liabilities, and capital of a business on a specific date

 

beginning balance sheet: the first balance sheet a business prepares before it opens its doors to customers

 

chart of accounts: a list of the accounts of a business and the account numbers arranged in numerical order

 

credit: the amount on the right side of an account

 

debit: the amount on the left side of an account

 

debt: money that is owed

 

double-entry accounting system: the total of the debit entries equals the total of the credit entries the accounting equation must remain in balance

 

drawing: a personal withdrawal of funds or other assets by the owner

 

entry: each item placed into the journal

 

expense: an amount spent to keep the business operating

 

financial statements: accounting documents prepared to organize the financial picture of a company

 

GAAP: Generally Accepted Accounting Principles

 

general journal: a two-column accounting form used for sorting out transactions in chronological order

 

general ledger: a book or file containing all the accounts of the business

 

journal: a book or diary where transactions are recorded in chronological order

 

liability: anything that is owed, such as car payments or loans from banks

 

liquidate: to convert assets into cash

 

miscellaneous: containing various different kinds of items

 

opening an account: placing the account name and the account number in the ledger

 

opening entry: the first entry made into a journal of a new business

 

owner’s equity: the worth of the business; assets ‚Äì liabilities = owner‚Äôs equity

 

permanent accounts: the accounts found on the balance sheet: assets, liabilities, and capital

 

posting: the process of transferring information from the journal to the ledger

 

revenue: money received for the operation of the business

 

seed money: money to pay for expenses to start a business

 

source document: any piece of paper that provides details about a financial change in business (e.g., invoices, cheque stubs, cash register tapes)

 

statutes: permanent established rules or laws

 

temporary capital accounts: revenue, expenses, drawing, and income summary accounts that are only open for a period of time and then are transferred into the permanent capital account

 

transaction: a financial event changing the financial position of a business

 

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