Operating Expenses
Are the daily expenses incurred in the operation of a business
Gross Profit
Derived by subtracting the cost of goods sold from net sales and figures
Financial Accounting Standards Board (FASB)
In a non-government group of seven members
Fixed Expenses
Are expenses which are necessary, stable and occur regularly
Non-Operating Revenue
Is income which does not come from the primary goal of the business
Cash Flow
Is the amount of money which comes in and goes out of a business
Accounting
Is the recording, reporting and analysis of financial transactions according to accepted principles in order to provide meaningful financial information
Discretionary Expenses
Are expenses which are not necessary to daily operation of the business
Liquid Assets
Can be easily converted into cash; have a very low risk because prices are stable
Fixed Assets
Property which a firm owns long-term, will not be converted to cash for at least a year
Revenue
Represents the amount of money a business receives over a period of time
Assets
Are items of value which a company owns
Operating Revenue
Is income from sales or services based on the goal of the business
Net Income
Is the amount of money the business has earned after paying income taxes
Liabilities
Are the opposite of assets/ also known as obligations of one company to another
Income Tax
Required contribution for the support of a national, state or local government calculated based on income
Illiquid Assets
Are not able to be sold quickly; carry higher risk of losing
Total Expenses
Is a tabulation of all expenses incurred in running a business, exclusive of taxes or interest expense on interest income
Revenue Accounts
Help identify the source of revenue
Accounts Payable
Comprised of all short-term obligations owed to creditors, suppliers and other vendors, including materials acquired on credit
Depreciation
Measures the loss in value of an asset
Subledgers
Are divisions of the general ledger
Net Worth
Is the total value of a company or an individual
The Business Operating Cycle
Is the flow of transactions needed in business to complete a sale and collect the proceeds
Expense Accounts
Are specific for the expense they incur
Owner's Equity
Consists of the investment in the business as well as any retained earnings which are reinvested in the business
Notes Payable
Represent money owed on a collection cycle of one year or less, including bank notes and mortgage obligations
Profit & Loss Statement
Is a primary document of the general ledger
Generally Accepted Accounting Principles (GAAP)
Are detailed accounting principles, guidelines and rules used to prepare, present and report financial statements
Internal Accounting Controls
Are strategies used to monitor a business's resources