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By Brock Baker

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Money which is owed to a company by a customer for products and services provided on credit. This is often treated as a current asset on a balance sheet. A specific sale is generally only treated as an account receivable after the customer is sent an invoice.

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Accounts payable is money owed by a business to its suppliers shown as a liability on a company's balance sheet. It is distinct from notes payable liabilities, which are debts created by formal legal instrument documents.

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9. Explain the purpose of an income Statement.

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9. Explain the purpose of an income Statement.

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The purpose of an income statement is to assemble all the account information on revenues and expenses recorded during an accounting period and present them in the standard income-statement format.

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8. Explain the purpose of a Balance Sheet.

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8. Explain the purpose of a Balance Sheet.

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Creditors and interested stock investors use the balance sheet to determine a company's financial standing because it lists what a company owns and what it owes. The balance sheet contains summarized information on a company's assets -- the things that it owns and its liabilities -- the debts it has.

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an entry recording a sum received, listed on the right-hand side or column of an account. The opposite of debit.

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an entry recording an amount owed, listed on the left-hand side or column of an account. The opposite of credit.

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5. Define "owner's equity".  Then, give one example of owner's equity.

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5. Define "owner's equity".  Then, give one example of owner's equity.

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Owner’s equity is the owner’s rights to the assets of the business. Examples of Equity recognized in the financial statements include the following:

Ordinary Share Capital

Preference Share Capital (irredeemable)

Retained Earnings

Revaluation Surpluses

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4. Define the term "liabilities".  Then, give one example of a liability.

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4. Define the term "liabilities".  Then, give one example of a liability.

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a liability is defined as the future sacrifices of economic benefits that the entity is obliged to make to other entities as a result of past transactions or other past events. Example: Any type of borrowing from persons or banks for improving a business or personal income that is payable during short or long time

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3. Define the term "assets".  Then, give one example of an asset.

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3. Define the term "assets".  Then, give one example of an asset.

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An asset is an economic resource that a) can be owned, and b) is expected to provide future economic benefits. Example: Common asset categories include cashand cash equivalents.

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The purpose of accounting is to accumulate and report on financial information about the performance, financial position, and cash flows of a business.

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1. What is the basic accounting equation?

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1. What is the basic accounting equation?

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The basic accounting equation, also called the balance sheet equation, represents the relationship between the assets, liabilities, and owner's equity of a business.