Here you will find an outline of some of the key terms and concepts involved in bookkeeping.

ASSETS = LIABILITIES + EQUITY

Balance Sheet a/k/a Statement of Condition:

Statement of financial condition of a business as of a specific date (or point in time). The three components that make up a company’s balance sheet are the assets, liabilities and equity.

Assets:

Anything of value owned by a business.

Liabilities:

Anything a company owes to people or businesses other than its owners.

Equity a/k/a Capital:

Any debt owed to the business owners. Total assets minus total liabilities of an individual or company. For a company, also called net worth or shareholders’ equity or net assets.

Profit and Loss a/k/a Income Statement:

A business’s revenue (income) and expenses for a specific period of time. The difference between the total revenue and the total expense is your business net income.

Trial Balance:

A listing of the accounts in the general ledger and their balances as of a specified date; a trial balance will have the same total debit amount as it has total credit amounts.

Chart of Accounts:

A list of ledger account names (categories) into which all your accounting transactions will be recorded.

General Ledger:

A final entry summarizing all of a company’s financial transactions, through offsetting debit and credit accounts.