1. What is Accounting
When a company makes money, it has to keep track of where that money came from and where it goes.
This is called Accounting.
2. Accrual Accounting
A method of accounting that records transactions when they happen, not when the money is received or paid.
3. Cash Basis Accounting
A method of accounting that records transactions when the money is received or paid, not when they happen.
4. Income
Money you earn from doing work or selling something.
5. Expenses
Money you spend on things you need to run your business.
6. Profit
The money you have left over after you subtract your expenses from your income.
7. Loss
When your expenses are more than your income.
8. Assets
Things you own that have value.
9. Liabilities
Money you owe to others.
10. Equity
The difference between your assets and liabilities.
11. Revenue
The total amount of money coming into your business.
12. Accounts payable
Money you owe to others for goods or services you’ve received but haven’t paid for yet.
13. Accounts receivable
Money others owe you for goods or services you’ve provided but haven’t been paid for yet.
14. Debits and Credits
These marks are called debits and credits, and they help the company make sure it has the right amount of money and things.
15. Income Statement
A financial statement that shows your revenue, expenses, and net income over a period of time.16. Statement of Cash Flows
A financial statement that shows your revenue, expenses, and net income over a period of time.
17. General Ledger
When the company buys or sells something, or pays or gets paid, it has to make two marks in its special book called the general ledger.
18. Balance Sheet
It shows how much a company has, how much it owes and how much is left for the owner of the company.
19. Charts of Accounts
The company also has a list of all the things it can put in its special book, and each thing has its own special number.
This is called the chart of accounts.
20. Cost Of Goods Sold
The cost of the materials used to make what you’re selling.
21. Operating Expenses
The costs of running your business, not including cost of goods sold.
22. Gross Profit
The amount of money you have left over after subtracting cost of goods sold from revenue.
23. Net Income
The amount of money you have left over after subtracting operating expenses from gross profit.
24. Depreciation
The decrease in value of an asset over time.
25. Tax:
Tax is money you pay to help the government do things like build roads, schools, and keep people safe.
