Module 1 - Accounts

Introduction to accounting

AccountingA system of recording financial transactions in the form of financial statements.

Companies use it to:

Bill clients
Keep track of asstes and liabilities
Determine profitability
Track the flow cash

3 Remarkable concepts:

Assets: something valuable belonging to a person or organization such as cash, properties, investment or inventory. - an item with economical value now or in the future.

Liabilities: the responsibility of a person, business, or organization to pay or give up something of value. - a financial obligation that must be repaid.

Equities: the value of a company. -ownership of assets.

*BONUS: **

Prepaid expense: future expenses that have been paid in advance.Accounts receivable: is the balance of money due to a firm for goods or services delivered or used but not yet paid.Accounts payable: is an account that represents a company’s obligation to pay off a short-term debt to its creditors or suppliers.Notes payable: represents the amounts that remain to be paid.Accrued expenses: is an accounting term that refers to an expense that is recognized on the books before it has been paid.Deferred revenue: is a liability on a company’s balance sheet that represents a prepayment by its customers for goods or services that have yet to be delivered.Common stock: are shares of ownership in a corporation that afford their holders voting rights.Retained earnings: is the amount of net income left over for the business after it has paid out dividends to its shareholdersShares: are units of equity ownership interest in a corporation that exist as a financial asset providing for an equal distribution.