Welcome to a preview of EZ Accounting...

Inside EZ Accounting you will find a glossary of accounting and financial terms for a profit company as well as a glossary of accounting terms for non-profit organizations, state and local governments, and college and universities. The accounting terms are in alphabetical order and are easy to read. Also, in EZ Accounting, you will learn how to record accounting transactions in two formats. One is the account type format with full explanation of why it is debited and why it is credited. The other is the "T-Account" format. "T-Accounts" are used to better understand debits and credits. There is also a "T-Account" calculator!! For your preview, we have opened these links to the user only section of our site, the rest of this information can only be accessed if you sign up. Recording Debits & Credits More Info Example 1

Transaction: The entity made a partial payment of $2,500 on its open account. Account: Current Liabilities Description: Accounts Payable Affects Balance Sheet: Yes Affects Income Statement: No The balance in the Accounts Payable account is a Credit. Debit Accounts Affected Debit Amt(s) Debit Account Debit: 2,500.00 Accounts Payable Credit Accounts Affected Credit Amt(s) Credit Account Credit: 2,500.00 Cash Full Explanation: Accounts payable is debited because the entity paid $2,500 on its account which decreases accounts payable. The entity made a partial payment on account which decreases cash. Example 2 Transaction: The entity purchased $5,000 of supplies on account. Account: Current Liabilities Description: Accounts Payable Affects Balance Sheet: Yes Affects Income Statement: Yes The balance in the Accounts Payable account is a Credit. Debit Accounts Affected Debit Amt(s) Debit Account Debit: 2,500.00 Supplies Expense Credit Accounts Affected Credit Amt(s) Credit Account Credit: 2,500.00 Accounts Payable Full Explanation: Supplies expense is debited because the entity purchased supplies. Accounts payable is credited because the supplies were purchased on account (charged). Examples of Accounting Terminology Glossary Of Accounting And Financial Terms For A Profit Company    A Accounting Equation The accounting equation is assets = liabilities + owner's equity. This equation is the basis of a balance sheet. Accounts Payable It is also called A/P. Accounts payable are the bills a business owes to suppliers. Accounts Receivable It is also called A/R. Accounts receivable are the amounts owed to a company by its customers. Accrual Basis Of Accounting Accrual basis of accounting is based upon generally accepted accounting principles... More accounting terminology, Purchase Now Glossary Of Accounting Terms For Non-Profit Organizations, State And Local Governments, And Colleges And Universities    A Accounting Equation The equation is as follows: assets=liabilities+net assets. The equation is the basis of a statement of financial position for a non-profit organization. The equation for a balance sheet of a state and local government and a college and university is: assets=liabilities+fund equity or fund balance. Accounts Payable It is also called A/P. Accounts payable are the bills a non-profit organization or a municipality or a college and university owes to suppliers. Accounts Receivable It is also called A/R. Accounts receivable are the amounts owed to a non-profit or a municipality or a college and university by its customers. A municipality has customers in their enterprise fund activity. A college and university has customers in their auxiliary enterprise activity. More accounting terminology, Purchase Now Recording and Posting Accounting Transactions Debit and Credit In order to record an accounting transaction, it is necessary to make a debit and a credit. An accounting transaction cannot occur without a debit and credit! It is an incomplete entry and the transaction is out of balance. Recording Accounting Transactions - Three examples. Paid users get them all. To illustrate the debiting and crediting of accounts, please review the transactions of John F. Smith, a sole proprietor, doing business as XYZ Company. Please analyze each transaction to see what increases and decreases occurred, and observe the debit and credit entries which record these increases and decreases. T-Accounts are being used and only the amounts of debits and credits are shown. As stated earlier the asset accounts and expense accounts are shown at the left; liability, owner's equity and revenue accounts are shown at the right. 1) Merchandise was sold to a customer for $5,900 on account. The accounts receivable asset is increased because the customer owes the company for the merchandise it received - debit accounts receivable. The revenue account is increased because the company generated sales of $5,900 by selling merchandise to a customer - credit sales.    Accounts receivable      $5900                             Sales                   Balance   $ 100     $5900     $6000     2) John F. Smith contributed capital of $5,000 for working capital. The cash asset is increased because cash was put into the business by the sole proprietor - debit cash. The owners' equity is increased because John F. Smith contributed $5,000 in working capital to his business - credit capital.    Cash      $ 100     $5000     $5100                    Balance    John F. Smith, Capital                       $5000       3) Office supplies of $125 was purchased on account. The office supplies expense account is increased because it is an expense for the company - debit office supplies. The accounts payable liability is increased because the company purchased the office supplies on account (credit) - credit accounts payable.    Office supplies       $125                             Accounts payable                   Balance    $2500     $ 125     $2625   BALANCE SHEET See Examples 1-4 illustrating a sample balance sheet for each type of entity. Example 1 - Sole Proprietorship Example 2 - Partnership Example 3 - Corporation Example 4 - Non-Profit Your own balance sheets - Interactive, calculating work sheets to enter your own account balances! Calculator 1 - Sole Proprietorship Calculator 2 - Partnership Calculator 3 - Corporation Calculator 4 - Non-Profit INCOME STATEMENT See Examples 1-4 illustrating a combined income statement for each type of entity. Example 1 - Sole Proprietorship Example 2 - Partnership Example 3 - Corporation Example 4 - Non-Profit Your own combined income statement - Interactive, calculating work sheets to enter your own combined income statement and capital! Calculator 1 - Sole Proprietorship that has an inventory income statement and changes for the period or year that is applicable. Calculator 2 - Sole Proprietorship that does not have an inventory income statement and changes for the period or year that is applicable. Calculator 3 - Partnership that has an inventory income statement and changes for the period or year that is applicable. Calculator 4 - Partnership that does not have an inventory income statement and changes for the period or year that is applicable. Calculator 5 - Corporation that has an inventory income statement and changes for the period or year that is applicable. Calculator 6 - Corporation that does not have an inventory income statement and changes for the period or year that is applicable. Calculator 7 - Non-profit CASH FLOW STATEMENT See Examples 1-4 illustrating a cash flow statement for each type of entity. Example 1 - Sole Proprietorship Example 2 - Partnership Example 3 - Corporation Example 4 - Non-Profit Example 5 is a work sheet that will assist you to better understand the increases or decreases in cash flow. Your own cash flow statement - Interactive, calculating work sheet to compute your own cash flow! Calculator 1 - Cash Flow Statement NOTES TO A FINANCIAL STATEMENT Example 1 illustrates examples of notes to a financial statement. Reports Prepared by a Certified Public Accountant Only four basic types of reports will be included here. There are many other modifications of these reports that are very complex that will not be discussed. COMPILATION REPORTS This is an accountant's report. Most small business owners use this type of accountant's report. Example 1 - shows an example of a compilation report with notes. Example 2 - shows an example of a compilation report without notes. REVIEW ACCOUNTANT'S REPORT Example 1 shows an example of a review report. INDEPENDENT AUDITOR'S REPORT Example 1 - shows an example of an independent auditor's report. RATIOS Example 1 illustrates these ratios. Your own ratios - Interactive, calculating work sheet to analyze your business and industry! Calculator 1 - Ratios Click here to purchase.