Assets are things a business owns and are used to make goods or render services, giving a business revenue.

Current assets are easy to liquidate and can be used within a year

non-current assets are difficult to dispose of and can be used for more than a year

Liabilities are obligations to other companies, such as debts, loans, and other things that the business should pay.

Current liabilities are due to be paid within the next 12 months.

Non-current liabilities are debts that will mature beyond the one year period, such as long-term loans, mortgages,
and bonds.

Equity is the total amount of the capital invested by the owner into a business

Statement of Financial Position shows a company's financial condition as of a given period. It shows the assets,
liabilities, and equity of a business.

A partnership's equity section shows the capital balances of each business partner.

In corporations, the equity section shows the shares of stocks and the retained earnings.

Report form – vertical (comparing)

Account form – horizontal (equality)

Statement of Comprehensive Income (SCI) is the financial statement that shows a business's performance in terms
of profit or loss for a specific period.

net income is obtained by preparing an income statement

OCI consists of all unrealized gains and losses that are not reflected in the income statement

single-step approach is the simpler way of presenting a business’s income statement. (used by service business)

Income/Revenue is the total amount that the business generated from rendering services to the customers.
Expenses are the total amount of money spent or incurred by a business to generate income.

Net Income/Net Loss is the result of a business’s operation for a specific period

multi-step approach reports the same profit/loss performance of a business (used by merchandising businesses)

Sales are the total amount that the company generates from selling goods.

Contra Sales is called "contra" because it is found on the opposite side of the sales account and decreases sales.

Sales Returns and Allowances involve amounts recorded when customers return their items for reasons such as, but
not limited to, defects.

Sales Discounts are the amounts used to record the early payments made by the customers.

Cost of Goods Sold is the total cost incurred in producing the goods sold to customers.

Beginning Inventory is the total amount of inventory at the beginning of the period.

Purchases are the total amount of goods bought during the current accounting period.

Contra Purchases are the accounts that are being credited as an opposite to the normal balance of purchases.
Purchase Discounts are used to record discounts availed for early payments made to the suppliers of a business.

Purchase Returns and Allowances is the account a business uses to return the merchandise to the supplier.

Freight In is the account used in recording the transportation costs of merchandise purchased by a company.

Ending Inventory is the amount of inventory presented on the balance sheet.

Gross Profit is computed by deducting the Cost of Goods Sold from Sales.

Operating Expenses are expenses related to the business's function

Non-operating Expenses are expenses that are not directly related to the merchandising function of a business, but
these are necessary to the operation of the business.