Bookkeeping (2)

Accounting Definitions

Current Assets

Cash: Money on hand or in bank accounts, used for daily operations and business transactions.
Accounts Receivable: Amounts due from customers for goods or services provided on credit.
Notes Receivable: Amounts due from clients that are supported by a written promise or note.
Inventories: Goods held by the company for resale in the course of business.
Supplies: Items purchased by the business for use but not yet used at the reporting date.
Prepaid Expenses: Payments made in advance for goods or services to be received in the future.
Accrued Income: Revenue that has been earned but not yet collected by the business.
Short-term Investments: Investments that the company plans to sell or convert into cash within a year.

Property, Plant, and Equipment (PPE): Long-lived assets used in the operations of the business, such as buildings, machinery, and equipment.
Long-term Investments: Investments made by the company with the intent to hold them for more than one year, such as stocks or bonds in other companies.

Accounts Payable: Amounts owed to suppliers for goods or services received on credit.
Notes Payable: Amounts owed to third parties that are supported by a written note or promise to pay.
Accrued Expenses: Expenses that have been incurred but not yet paid (e.g., salaries payable, taxes payable).
Unearned Income: Cash received in advance from customers for services or goods that are to be provided in the future.

Loans Payable: Amounts owed to creditors under a loan agreement, which is due beyond one year.
Mortgage Payable: Debt secured by a property, where the borrower agrees to repay the loan over a period, typically longer than one year.

Capital: The value of cash and other assets invested in the business by the owner(s) as their share of ownership.
Drawing: Withdrawals made by the owner(s) for personal use, which decrease owner's equity.