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Resources owned by a company that have economic value and can be converted into cash.

Obligations or debts that a company owes to others, which must be paid back in the future.

The owner's claim on the assets of a business; it equals assets minus liabilities.

The amount of money generated from selling goods or providing services during a certain time period.

The costs incurred to generate revenues, including costs like rent, salaries, and utilities.

An accounting system where each transaction is recorded in at least two accounts, with debits equaling credits.

An accounting method where revenue and expenses are recorded when they are earned or incurred, not necessarily when cash is received or paid.

An accounting method where revenue and expenses are recorded only when cash is received or paid.

The two sides of each transaction in double-entry bookkeeping; debits are on the left, credits on the right.

The main accounting record of a company that uses double-entry bookkeeping.

The means by which transactions are entered into the accounting system, typically involving a debit and a credit.

$\text{Assets} = \text{Liabilities} + \text{Equity}$; the fundamental equation that underlies all accounting.

The amount of money owed by a company to its creditors for goods or services purchased on credit.

The amount of money owed to a company by its customers for goods or services sold on credit.

Expenses that have been incurred (benefit received) but have not yet been paid or recorded.

Payments made in advance for goods or services to be received in the future.

The systematic allocation of the cost of a tangible asset over its useful life.

The process of gradually writing off the initial cost of an intangible asset over a period of time.

The net value of an asset, calculated as the asset's original cost minus accumulated depreciation or amortization.

An intangible asset that arises when a company acquires another company for more than the fair value of its net identifiable assets.

The raw materials, work-in-process goods, and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

The direct costs attributable to goods produced and sold by a business; includes the cost of materials and direct labor.

Revenue minus the cost of goods sold; indicates how efficiently a company uses labor and supplies in the production process.

The total profit or loss of a company after all revenues and expenses have been accounted for.

A report that lists the balances of all ledger accounts; used to verify that total debits equal total credits.

Journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.

Journal entries made at the end of an accounting period to transfer temporary accounts to permanent accounts.

Balance sheet accounts whose balances are carried forward from year to year; include assets, liabilities, and equity accounts.

Accounts that measure activity for only one period; include revenue, expense, and dividend accounts.

Formal records of the financial activities and position of a business, person, or other entity.

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.

A financial statement that shows the company's revenues and expenses over a period of time.

A financial statement that summarizes the amount of cash and cash equivalents entering and leaving a company.

A financial statement that outlines the changes in retained earnings for a specified period.

An account that is used to reduce the value of a related account on a company's balance sheet.

A contra asset account representing the estimated amount of accounts receivable that may not be collectible.

The ability of a company to meet its short-term financial obligations as they come due.

The ability of a company to meet its long-term debts and financial obligations.

Long-term assets that are not expected to be converted to cash within a year, such as property, plant, and equipment.

Assets that are expected to be converted into cash, sold, or consumed within a year.

Obligations that a company needs to pay off within a year's time.

The difference between current assets and current liabilities. It measures a company's short-term financial health and operational efficiency.

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Expenses that are required for the day-to-day functioning of a business and includes costs such as rent, utilities, and salaries.

The process of ensuring that two sets of records (usually the balances of two accounts) are in agreement.

An official inspection of an individual's or organization's accounts by an independent body, typically by an external or internal auditor.