Accounts Payable, - the account that shows the total amount owed to creditors for the purchase of goods or services by the business, Balance sheet, a formal financial statement that lists assets, liabilities, and owner's equity at a specific date; also called a “statement of financial position”, Cost principle, assess must be shown on the balance sheet using the cost of their acquisition or construction, Double-entry accounting, a system of financial record keeping in which debit entries must equal credit entries for each transaction, Equities, claims against assets, Financial Position, the financial status of a person or company represented by the assets, liabilities, and net worth or personal equity, calculated by assets - liabilities = net worth, General journal, a book of original entry that provides a chronological record of all transactions, including the accounts debited and credited; where transactions are first recorded, Income statement, a formal financial statement that summarizes revenue and expenses to determine the net income or net loss for a stated period of time, Journalizing, recording transactions in a journal, Liquidity order, the order in which assets can be converted to cash; current assets are listed in order of liquidity, Maturity date, the date when liabilities are due to be paid; liabilities are listed on the balance sheet according to their maturity date, Net income, the difference between revenue and expenses when revenue is greater then expenses; increases owners’ equity, Owners equity, the owner’s claim against the assets of the company and is calculated by adding up all the business assets and deducting all of its liabilities Assets - Liabilities = Owners equity, Personal net worth, the difference between the cost of items owned and debts owed; also referred to as “personal equity”, Revenue recognition principle, revenue is recognized at the time the revenue is definitely earned, Trial balance, a list of all active ledger account balances; total debits must equal total credits; proves mathematical accuracy of ledger; see also post-closing trial balance

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