Book Value
The original value of an asset minus its depreciation or liability.
Gross Profit
Revenue minus the cost of goods sold (COGS), before deducting operating expenses.
Expense
The costs incurred by a business in generating revenue.
Journal Entry
A record of a financial transaction in the accounting system.
Net Income
The profit remaining after all expenses, taxes, and costs have been deducted from revenue.
Income Statement
A financial report showing revenue, expenses, and net profit over a period.
Financial Statements
Reports summarizing financial activities, including the balance sheet, income statement, and cash flow statement.
Depreciation
The systematic allocation of an asset's cost over its useful life. It's recorded as an expense on the income statement.
Trial Balance
A report that lists all ledger account balances to check if total debits equal total credits.
Revenue
The total amount of money earned from business activities before deducting expenses.
Assets
Resources owned by a company that have economic value, such as cash, inventory, and property.
Budgeting
Creating and maintaining a financial plan to manage cash flow.
Debit
An accounting entry that increases assets and expenses and decreases liabilities and equity.
Cost of Goods Sold (COGS)
The expenses directly related to creating a product or service.
Balance Sheet
A record of a business's assets, liabilities, and equity at a specific time. It's used to assess a business's financial health.
Cash Flow
The amount of cash a business generates or spends within a period. Positive cash flow means a business is generating more money than it's spending.
Working Capital
Current assets minus current liabilities, indicating a company's short-term financial health.
Amortization
The gradual reduction of a debt or intangible asset over a specified period.
Liabilities
A company's debts to third parties.
Credit
An accounting entry that increases liabilities or equity and decreases assets.
Capital
Financial assets or resources that a company uses to fund operations or growth.
Equity
The value of a business, calculated by subtracting liabilities from assets.
General Ledger
A company's set of numbered accounts that record financial transactions. It includes assets, liabilities, equity, revenues, and expenses.
Accounts Receivable
Money customers or other debtors owe to a business.
Accrual Accounting
An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.
Accounts Payable
Money a company owes to another party.
Bookkeeping
The recording of financial transactions in an organized manner.