The amount added to the cost of merchandise to establish the selling price is called a mark-up.

In a T account, amounts recorded on the left side are called credits.

Net assets is the difference between total revenue and total expenses.

A business document used to record a journal entry is called a source document.

Accounts Payable is an example of a long term liability.

The general journal is the only journal used by most businesses to initially record their transactions.

A general journal contains all the summarized balances of all the accounts.

Only general ledger accounts with balances are included in a post-closing trial balance.

The term total earnings is also called gross pay or gross earnings.

Most equipment purchases are useful for less than one year.

Liabilities due within a short period of time, usually a year, are called current liabilities.

A sale increases owner's equity (revenue) and decreases an asset.

Transferring information from a journal to the general ledger is called posting.

A person or business to whom merchandise or services are sold is called a vendor.

A sales invoice for the seller is a purchase invoice to the customer.

The three key financial statements are the balance sheet, income statement, and the cash flow statement.

The acronym GAAP stands for generally accepted auditing procedures.

The "bottom line" of an income statement is called net income or net loss.

Assets = Cash + Owner's Equity

Owner's equity is equal to net assets.

Equipment is an example of a liquid asset.

Good cash management would suggest maintaing accounts receivable balances at as low a level as practical.

The total amount of a variable expense fluctuates with increases and decreases in volume.

In order to prosper and survive, a business needs profits and cash flow.

The amout owing for an uncollected sale is recorded in the asset account accounts payable.

The differences that result from the cash basis and accrual basis of accounting result from timing differences.

The IRS (Internal Revenue Service) requires some businesses to use the accrual basis of accounting.

When accountants capitalize an expenditure it means the amount spent is recorded as an expense.

Working Capital = Current Assets - Current Liabilities

The cost of goods sold expense appears in the balance sheet.