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AccountingA system of recording financial transactions in the form of financial statements.
Companies use it to:
3 Remarkable concepts:
Assets: something valuable belonging to a person or organization such as cash, properties, investment or inventory. - an item with economical value now or in the future.
Liabilities: the responsibility of a person, business, or organization to pay or give up something of value. - a financial obligation that must be repaid.
Equities: the value of a company. -ownership of assets.
Prepaid expense: future expenses that have been paid in advance.Accounts receivable: is the balance of money due to a firm for goods or services delivered or used but not yet paid.Accounts payable: is an account that represents a company’s obligation to pay off a short-term debt to its creditors or suppliers.Notes payable: represents the amounts that remain to be paid.Accrued expenses: is an accounting term that refers to an expense that is recognized on the books before it has been paid.Deferred revenue: is a liability on a company’s balance sheet that represents a prepayment by its customers for goods or services that have yet to be delivered.Common stock: are shares of ownership in a corporation that afford their holders voting rights.Retained earnings: is the amount of net income left over for the business after it has paid out dividends to its shareholdersShares: are units of equity ownership interest in a corporation that exist as a financial asset providing for an equal distribution.
a report on assets, liabilities, and equities for a period of time.
reports the profits and losses for a period of time.
the book value of a company.
Notes to financial statement:
add helpful details to financial statements.
Statement of cash flows:
reports on the movement of cash in operating, investing and financing.
a business owned by one person.
a business owned by two or more people.
a legal entity separate from the person who owns it.
compares the difference between a monthly income and the amount needed to pay off debt.
a tool used to compare and track the performance of a corporation.
a securitized contract between two or more parties whose value is dependent upon one or more underlying assets.