Accounting and finance vocabulary includes liabilities, assets, and owners' equity. Liabilities are debts owed, assets are resources expected to provide future cash flows, and owners' equity is the remaining value after deducting liabilities from assets. Accounting identifies, records, summarizes, and reports economic information in financial statements like the balance sheet and income statement. The balance sheet shows what a business owns, owes, and is worth by listing assets, liabilities, and owners' equity. The income statement reports revenue, expenses, and profit over the past year. Accounting and finance information is useful for managers, owners, investors, creditors, and regulators in assessing, monitoring, and forecasting a business.

1. Accounting and Finance

2. Accounting and Finance
Vocabulary
Liabilities: Obligations of the firm to outsiders or claims against its assets
by outsiders (debts of the firm).
Assets: Resources of the firm that are expected to increase or cause future
cash flows (everything the firm owns)
Owners’ Equity :The residual interest in, or remaining claims against, the
firm’s assets after deducting liabilities (rights of the owners)
Accounting : A process of identifying, recording, summarizing, and
reporting economic information to decision makers in the form of
financial statements.
Annual report : A document prepared by management and distributed to
current and potential investors to inform them about the company’s past
performance and future prospects.

3. Accounting and Finance
Accounting information is useful to anyone who
makes decisions that have economic results.
 MANAGERS
 OWNERS
 INVESTORS
 CREDITORS
 GOVERNMENT REGULATORS

4. Accounting and Finance
The Balance Sheet
The balance sheet equation:
Assets = Liabilities + Owners’ Equity
or
Owners’ Equity = Assets - Liabilities
In Accounting , An Itemized Statement of What one
owns, What one owes, What one s worth is called a
Balance Sheet

5. Accounting and Finance
Balance Sheet Reports What a Business:
Owns – Assets
Owes – Liabilities
Worth – Owners Equity

6. Accounting and Finance
Income Statement reports How much you earned Last Year
 Revenue
 Expense
 Profit

7. Accounting and Finance
What is the need for Accounting & Finance in a Business:
Assess Monitor
Forecast Future

8. Accounting and Finance
Expense Tangible Financial Statements Balance Sheet profitable.
Intangible
For a business enterprise, all the relevant financial information is presented in a
structured format that is easy to understand. These are called ________ . There are
several important financial statements.
Managers want to know if a new product will be _____________
An outflow of cash or other valuable assets from a person or company to another person
or company is an ___________
In Accounting , An Itemized Statement of What one owns, What one owes, What one
s worth is called a _______________
________ assets are physical things , for example machines and property. ________
assets are not physical in nature, for example a company's reputation.

9. Accounting and Finance
Match the balance sheet items on the left to their definition on the right:
1. Accounts receivable
A. Borrowed money which the company must
pay back within a year.
2. Prepaid expenses
B. The money owed to a business by its clients
3. Account payable
C. Intangible assets like a company’s brand
name and established relationships with its
suppliers
4. Stock / Inventory
D. Costs paid in advance such as rent and
interest
5. Plant & Equipment
E. The money a company has received from
outside investors for its shares
6. Share capital
F. The money owed by a business to its
suppliers
7. Goodwill
G. The goods and materials that a business
holds for the purpose of resale
8. Short-term debt
H. What a company owns and uses to
produce goods, such as factory and
machinery.