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Entrepreneruship
Term | Definition |
---|---|
GAAP | "generally accepted accounting principles" |
Financial Reports | documents that summarize the results of your business operation and provide a picture of its financial position |
Accounting period | block of time covered by your accounting report |
Calendar year | one year period that begins January 1 and ends on December 31 |
Fiscal year | year long period around which your financial reports are dictated |
Assets | anything of value that the business owns |
Current assets | are cash or other items that can be converted to cash fairly quickly and are used by the business within the year |
Accounts receivable | the amount customers owe your business |
Fixed assets | items that will be held for more than one year |
Liabilities | are the debts of the business |
Accounts payable | most common account classification; this is the amount of money that your business owes to creditors |
Owner's equity | the total amount of assets minus total liabilities will give you the worth of your business |
Chart of accounts | list of accounts a business uses in its operation |
Debits | left side of the account |
Credits | the right side of the account |
Cash basis | recording your income when it is received and your expenses when they are paid |
Accrual basis | you record income when it is earned and expenses when they are incurred |
Journal | the financial diary of the business |
Journalizing | the process of recording business transactions in a journal |
General journal | most common type of journal that is used to record any business transaction |
Posting | the process of transferring amounts from the general journal to accounts in the general ledger |
Income statement | a report of the revenue, expenses, and the net income or loss for the accounting period |
Balance sheet | a report of the final balances of all asset, liability, and owner's equity accounts and the end of an accounting period |
Cash flow | is the amount of cash that is available at any given time period |
Statement of cash flow | reports how much cash your business took in and where the cash went |