Chart of accounts (COA) is a created list of the accounts used by a business entity to define each class of items for

which money or the equivalent is spent or received. It is used to organize the finances of the entity and to segregate expenditures, revenue, assets and liabilities in order to give interested parties a better understanding of the financial health of the entity.

Balance Sheet A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders. The balance sheet must follow the following formula: Assets = Liabilities + Shareholders' Equity

Example Company Balance Sheet December 31, 2012 ASSETS Current Assets Cash Petty Cash Temporary Investments Accounts Receivable - net Inventory Supplies Prepaid Insurance Total Current Assets Investments Property, Plant & Equipment Land Land Improvements Buildings Equipment Less: Accum Depreciation Prop, Plant & Equip - net LIABILITIES Current Liabilities Notes Payable Accounts Payable Wages Payable Interest Payable Taxes Payable Warranty Liability Unearned Revenues Total Current Liabilities

$ 2,100 100 10,000 40,500 31,000 3,800 1,500 89,000

$ 5,000 35,900 8,500 2,900 6,100 1,100 1,500 61,000 20,000 400,000 420,000

36,000 Long-term Liabilities Notes Payable Bonds Payable 5,500 Total Long-term Liabilities 6,500 180,000 201,000 Total Liabilities (56,000) 337,000

481,000

Intangible Assets Goodwill Trade Names Total Intangible Assets Other Assets Total Assets

STOCKHOLDERS' EQUITY 105,000 Common Stock 200,000 Retained Earnings 305,000 Less: Treasury Stock Total Stockholders' Equity 3,000 $770,000 Total Liab. & Stockholders' Equity

110,000 229,000 (50,000) 289,000 $770,000

P&L
A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a "statement of profit and loss", an "income statement" or an "income and expense statement". General ledger is the main accounting record of a business which uses double-entry bookkeeping. It will usually include accounts for such items as current assets, fixed assets, liabilities, revenue and expense items, gains and losses. Each General Ledger is divided into debits and credits sections. The left hand side lists debit transactions and the right hand side lists credit transactions. This gives a 'T' shape to each individual general ledger account. A "T" account showing debits on the left and credits on the right. Debits Credits

1. Purchasing a Cash Register Cash (Asset) Fixed Asset (Asset) 2. Purchasing Candy on Account to Sell Accounts Payable (Liability) Inventory (Asset) 3. Selling Meat to Customer on Account Accounts Receivable Sales (Income) 4. Collecting The Account Receivable Accounts Receivable (Asset) Cash (Asset) 5. Paying Employees Payroll Expense (Expense) Cash (Asset)

Debit $2,000

Credit $2,000

$100 $100

$30 $30

$30 $30 $500 $500

Account Type Assets Liability Stockholder's Equity Income Expense

Debit Increases Decreases Decreases Decreases Increases

Credit Decreases Increases Increases Increases Decreases

Assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent ownership of value that can be converted into cash (although cash itself is also considered an asset.
Expense or expenditure is an outflow of money to another person or group to pay for an item or service, or for a category of costs. For a tenant, rent is an expense. For students or parents, tuition is an expense. Buying food, clothing, furniture or an automobile is often referred to as an expense. An expense is a cost that is "paid" or "remitted", usually in exchange for something of value.

Liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future. A liability is defined by the following characteristics:

Any type of borrowing from persons or banks for improving a business or personal income that is payable during short or long time; A duty or responsibility to others that entails settlement by future transfer or use of assets, provision of services, or other transaction yielding an economic benefit, at a specified or determinable date, on occurrence of a specified event, or on demand; A duty or responsibility that obligates the entity to another, leaving it little or no discretion to avoid settlement; and, A transaction or event obligating the entity that has already occurred.

Net worth: For a company, this is known as shareholders' (or owners') equity and is determined by subtracting liabilities on the balance sheet from assets. For example, if a company has $45 million worth of liabilities and $65 million in assets, the company's net worth (shareholders' equity) is $20 million ($65 million - $45 million Accounts payable, also known as Creditors, is money owed by a business to its suppliers and shown on its Balance Sheet as a liability. An accounts payable is recorded in the Account Payable sub-ledger at the time an invoice is vouchered for payment. Vouchered, or vouched, means that an invoice is approved for payment and has been recorded in the General Ledger or AP subledger as an outstanding,or open, liability because it has not been paid. Accounts receivable also known as Debtors, is money owed to a business by its clients (customers) and shown on its Balance Sheet as an asset.[1] It is one of a series of accounting transactions dealing with the billing of a customer for goods and services that the customer has ordered. Trial balance is a list of all the General ledger accounts (both revenue and capital) contained in the ledger of a business. This list will contain the name of the nominal ledger account and the value of that nominal ledger account. The value of the nominal ledger will hold either a debit balance value or a credit balance value Your Business Name
Trial Balance June 31, 20XX Debit Cash Accounts Receivable Supplies Prepaid Rent $800.00 400.00 600.00 1,200.00 Credit

Equipment Accounts Payable Owner, Capital Owner, Drawing Sales Salary Expense Misc. Expense

10,000.00 $3,000.00 9,000.00 1,000.00 3,000.00 700.00 300.00 $15,000.00 $15,000.00

profit and loss statement segregates the operating revenues and operating expenses from the nonoperating revenues, nonoperating expenses, gains, and losses. The multiple-step income statement also shows the gross profit (net sales minus the cost of goods sold).

Sample Products Co. Income Statement For the Five Months Ended May 31, 2012 Sales Cost of Goods Sold Gross Profit Operating Expenses Selling Expenses Advertising Expense Commissions Expense Administrative Expenses Office Supplies Expense Office Equipment Expense 3,500 2,500 6,000 2,000 5,000 7,000 $100,000 75,000 25,000

Total Operating Expenses Operating Income Non-Operating or Other Interest Revenues Gain on Sale of Investments Interest Expense Loss from Lawsuit Total Non-Operating Net Income

13,000 12,000

5,000 3,000 (500) (1,500) 6,000 $ 18,000

Normal profit and loss account duration: 1year or quarterly. Income Taxes: The income tax amount has not actually been paid - it is an estimate, or an account that has been created to cover what a company expects to pay.

Income Account: Income accounts are any type of account that is set up to receive interest from different types of investments, as well as interest generated by credit balances. The term is also used in accounting processes to refer to expense and revenue accounts, making it easier to track profits and losses for a specified accounting period. Individuals, corporations, and even governments often make use of the income account as a means of keeping financial matters in order. Cost of sales is the caption commonly used on a manufacturers or retailers income statement instead of the caption cost of goods sold or cost of products sold. The cost of sales for a manufacturer is the cost of finished goods in its beginning inventory plus the cost of goods manufactured minus the cost of finished goods in ending inventory. The cost of sales for a retailer is the cost of merchandise in its beginning inventory plus the net cost of merchandise purchased minus the cost of merchandise in its ending inventory. The cost of sales does not include selling expenses or general and administrative expenses, which are commonly referred to as SG&A.

Expense account is the right to reimbursement of money spent by employees for work-related purposes. Net profit is the money left over after paying all the expenses of an organization. Net profit ($) = Sales revenue ($) - Total costs ($) Gross profit margin is a measurement of a company's manufacturing and distribution efficiency during the production process. The gross profit tells an investor the percentage of revenue / sales left after subtracting the cost of goods sold. A company that boasts a higher gross profit margin than its competitors and industry is more efficient.