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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