Analyzing Transactions

Vocabulary

accounts receivable

outstanding invoices on credit that are due to be paid to the company

asset

economic resource that a business owns that is expected to provide future benefits

chart of accounts

list of all accounts including assets, liabilities, revenues, expenses, and equity, as a means of keeping track in the general ledger

credit

addition to a revenue or liability account or deduction from an expense or asset account

debit

addition to an expense or asset account or deduction from a revenue or liability account

double-entry accounting

system of recording economic events in which every entry affects at least two accounts. This can be especially beneficial for businesses, as they have numerous transactions and need to make complex decisions.

expense

cost of buying materials, paying employees, or any other type or purchase in order to generate revenue; the cost of doing business

general journal

book or database where economic events are recorded

general ledger

book or database with separate records for each account

journal entry

transaction recorded in the general journal made using double-entry accounting

liability

obligation or amount owed to another individual or entity as a result of a past transaction

owner's equity

value after debts and obligations have been accounted for, or the total business assets less liabilities

revenue

money or resources received or expected to be received by the company in exchange for goods or services rendered

single-entry accounting

simple type of bookkeeping in which only one side of a transaction is noted

T account

accounting tool to keep track of beginning and ending balances as well as changes (debits and credits) within an account with a debit and a credit side for each specific account

trial balance

list of an organization's accounts and their balances on a specific date