Definition (What It Means) Accounting is the process of recording, summarizing, analyzing, and reporting financial transactions of a business or…

Accounts payable represents money a company owes to suppliers or vendors for goods and services received. Explanation:It is a current…

Accrual accounting records revenues and expenses when they are earned or incurred, not when cash is received or paid. Explanation:This…

Accrued expenses are costs that have been incurred but not yet paid or recorded. Explanation:They are recorded through adjusting journal…

Assets are resources owned by a business that have economic value and can provide future benefits. Explanation:Assets can be tangible…

Definition (What It Means) Bookkeeping is the process of recording all financial transactions of a business in a systematic and…

Cash basis accounting records revenues and expenses only when cash is received or paid. Explanation:This method is simple and used…

Current assets are assets that are expected to be used or converted into cash within one year. Explanation:These include: Cash…

Debt is the amount of money borrowed by a business that must be repaid, usually with interest. Explanation:Debt includes loans,…

Double-entry accounting is a system where every financial transaction affects at least two accounts, ensuring the accounting equation stays balanced.…

Equity is the owner's claim on the assets of a business after all liabilities are paid. Explanation:Equity is also known…

Fixed assets are long-term tangible assets used in a business to produce income. Explanation:Also called property, plant, and equipment (PPE),…

GAAP refers to a set of standardized accounting rules and guidelines used in the U.S. to prepare financial statements. Explanation:GAAP…

Goodwill is an intangible asset that represents the value of a business's reputation, customer loyalty, and brand recognition. Explanation:Goodwill arises…

Definition (What It Means) A Journal is the first official book of entry where all financial transactions are recorded in…

Definition (What It Means) A Ledger is a book or digital record that organizes and summarizes all transactions for each…

Liabilities are the debts or obligations a business owes to others. Explanation:Liabilities represent what a business must pay, whether in…

The matching principle requires that expenses be recorded in the same period as the revenues they help generate. Explanation: This…

Owner’s capital is the amount of money or assets invested by the owner into a business. Explanation:It reflects the owner’s…

Retained earnings are the accumulated net profits of a company that are not distributed as dividends but reinvested in the…

Revenue is the income a business earns from its normal operations, such as selling goods or services. Explanation:Revenue is often…

Revenue recognition is the accounting principle that determines when revenue should be recorded in the books. Explanation:Under accrual accounting, revenue…

A trial balance is a summary of all ledger account balances used to check the accuracy of bookkeeping. Explanation:It lists…