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Accounts on the Balance Sheet and Income Statement

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Termini in questo insieme (20)

  • What are assets on the balance sheet?

    Assets are resources owned by a company that provide future economic benefits, such as cash, inventory, and property.

  • Define liabilities on the balance sheet.

    Liabilities are obligations the company owes to others, like loans, accounts payable, and mortgages.

  • What is owner's equity on the balance sheet?

    Owner's equity represents the residual interest in the assets after deducting liabilities; it includes common stock and retained earnings.

  • Name common current assets.

    Common current assets include cash, accounts receivable, inventory, and prepaid expenses.

  • What are long-term assets?

    Long-term assets are assets held for more than one year, such as property, plant, equipment, and intangible assets.

  • List typical current liabilities.

    Typical current liabilities include accounts payable, short-term debt, and accrued expenses.

  • What is included in long-term liabilities?

    Long-term liabilities include debts due after one year, such as mortgages and bonds payable.

  • Define revenue on the income statement.

    Revenue is the total amount earned from sales of goods or services before expenses.

  • What are expenses on the income statement?

    Expenses are costs incurred to generate revenue, including cost of goods sold, operating expenses, and interest expense.

  • What is gross profit?

    Gross profit is revenue minus cost of goods sold, showing profit from core operations before other expenses.

  • Define net income.

    Net income is the profit after all expenses, taxes, and costs have been deducted from total revenue.

  • What is retained earnings on the balance sheet?

    Retained earnings are accumulated net income kept in the company rather than paid out as dividends.

  • Explain accounts receivable.

    Accounts receivable are amounts owed to the company by customers for sales made on credit.

  • What is accounts payable?

    Accounts payable are amounts the company owes to suppliers for purchases made on credit.

  • Describe inventory as an account.

    Inventory represents goods held for sale in the ordinary course of business.

  • What is depreciation expense?

    Depreciation expense allocates the cost of a tangible asset over its useful life.

  • Define operating expenses.

    Operating expenses are costs related to running the business, such as rent, utilities, and salaries.

  • What is interest expense?

    Interest expense is the cost incurred from borrowing funds.

  • Explain prepaid expenses.

    Prepaid expenses are payments made in advance for goods or services to be received in the future.

  • What is the formula for the accounting equation?

    The accounting equation is \(\text{Assets} = \text{Liabilities} + \text{Owner's Equity}\).