Lorena Ortiz

IJCJ24008
Independence Junior Collage
Accounting 100
July 10,2024
Vocabulary Booklet

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Table of contents

Accounts Payable,
Accounting,
Accounting Cycle,
Accounting Equation,
Accounts Receivable,
Assets,
balance sheet,
Capital………………………………………………………..P.g. 1

Chart of Accounts,
Credit,
Debit,
Double Entry,
Equity,
Expense,
income statement,
Liabilities………………………………………………………P.g 2

Matching Principles,
Revenue…………………………………………………………P.g. 3

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Accounting is systematic process of recording, summarizing, analyzing, and reporting the
financial transactions of a business. It involves meticulously documenting all financial
activities, which are then summarized and analyzed to provide insights into the business's
financial health. This information is crucial for oversight agencies, regulators, and tax
authorities, ensuring transparency and compliance with financial regulations. The accounting
cycle typically includes steps such as identifying transactions, recording them in journals, and
posting to ledgers, ultimately leading to the generation of financial statements that reflect the
company's performance E.g. Money a company owes to its creditors, such as unpaid bills,
invoices, debts to suppliers, and credit card or line of credit debts.

Accounting Cycle is the systematic process of identifying, analyzing, and recording the
financial events of a business. It typically involves several key steps: first, analyzing
transactions to determine their impact on the financial statements; then, journalizing these
transactions to create a chronological record. Next, the transactions are posted to the ledger,
where they are organized by account. Afterward, a trial balance is prepared to ensure that
debits equal credits. Adjusting entries are then made to account for any accrued or deferred
items. Finally, financial statements are prepared to summarise the business's performance,
and the books are closed for the accounting period
E.g. Identifying, measuring, and communicating economic information to permit informed
judgments and decisions by users of the information.

Accounting Equation is a fundamental principle of accounting that represents the

relationship between a company's assets, liabilities, and equity. It is expressed as: Assets =
Liabilities + Equity. This equation must always balance, meaning that the total value of the
company's assets must equal the sum of its liabilities and equity.
E.g. Represents the relationship between a company's assets, liabilities, and equity, expressed
as: Assets = Liabilities + Equity.

Accounts Receivable refers to the money owed to a company by its customers for goods or
services provided on credit. It represents an asset on the company's balance sheet, as it is a
claim against the customer for payment.
E.g. Refers to the money owed to a company by its customers for goods or services provided
on credit.

Assets are economic resources owned by a business, which are expected to provide future
benefits. They can be tangible, such as cash, inventory, and property, or intangible, such as
patents and trademarks. Assets are typically found on a company's balance sheet.
E.g. Economic resources owned by a company, such as cash, inventory, property, and
equipment, which are expected to provide future benefits.

Balance Sheet is a financial statement that provides a snapshot of a company's financial

position at a specific point in time. It presents the company's assets, liabilities, and equity, and
it must adhere to the accounting equation (Assets = Liabilities + Equity).
E.g. Financial statement that provides a snapshot of a company's financial position at a
specific point in time, showing its assets, liabilities, and equity.

Capital refers to the financial assets or the financial value of assets such as funds held in
deposit accounts, as well as the tangible machinery and production equipment used in a
business. It can also represent the ownership interest in a business, including both contributed
capital and retained earnings.

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E.g. financial assets or the financial value of assets such as cash and goods used in the
production of other goods or services

Chart of Accounts is a list of all the accounts used by an organization to record financial
transactions. It provides a systematic method for the organization and classification of
accounting transactions.
E.g. List of all the accounts used by a company to record financial transactions, typically
organized by account type and in a specific order for ease of use.

Credit refers to an entry on the right side of a double-entry bookkeeping system that
represents the reduction of an asset or an increase in a liability or equity. It is used to record
the sources of funds or the right side of the accounting equation.
E.g. An entry that represents an increase in liabilities or equity or a decrease in assets on the
company's balance sheet.

Debit refers to an entry on the left side of a double-entry bookkeeping system that represents
the increase of an asset or the reduction of a liability or equity. It is used to record the uses of
funds or the left side of the accounting equation.
E.g. An entry that represents an increase in assets or a decrease in liabilities or equity on the
company's balance sheet.

Double Entry is a fundamental accounting principle that requires every transaction to have
equal and opposite effects in at least two different accounts. This ensures that the accounting
equation remains in balance and that the financial statements are accurate.
E.g. Fundamental accounting concept where every financial transaction has equal and
opposite effects in at least two different accounts.

Equity represents the ownership interest in a company. It can include contributed capital
from shareholders and retained earnings. Equity is a crucial component of the accounting
equation, as it represents the residual interest in the assets of the entity after deducting
liabilities.
E.g. The residual interest in the assets of the entity after deducting liabilities. It is also known
as net assets or shareholders' equity.

Expense refers to the costs incurred in the process of generating revenue. It includes items
such as wages, rent, utilities, and supplies. Expenses are recorded on the income statement
and are subtracted from revenues to determine net income.
E.g. Is the costs incurred in the process of generating revenues, such as salaries, rent, utilities,
and supplies

Income statement is a financial statement that reports a company's financial performance

over a specific accounting period. It shows the revenues generated and the expenses incurred,
resulting in the net income or net loss of the company.
E.g. Shows a company's revenues and expenses over a specific period, resulting in the net
income or loss.

Liabilities are the obligations of a company, representing debts or future sacrifices of

economic benefits that the company is required to make. They can include accounts payable,
loans, and other financial obligations.

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E.g. Company's legal debts or obligations that arise during the course of business operations,
such as loans, accounts payable, and accrued expenses.

Matching Principles in accounting refers to the practice of matching expenses with the
revenues generated during the same accounting period. This principle ensures that the
financial statements accurately reflect the company's performance during a specific period.
E.g. expenses be matched with the revenues generated during the same period, ensuring that
the company's profitability is accurately measured.

Revenue refers to the income generated from the primary activities of a business, such as
sales of goods or services. It is recorded on the income statement and is a key component.
E.g.Income generated from the sale of goods or services, representing the company's
earnings.

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