Accounting Terms, Vocabulary, and Notes
Accounting - A tool that lets interested parties get the information they need from the
mountain of raw data.
A system for developing and communicating information needed for economic decision-making
Assets – Things of value
Resources
Probable future economic benefits obtained as a result of past transactions or events
Expected to benefit an entity in the future
Examples: cash, land, inventory, patents, buildings, equipment
Liabilities – Debts owed
Obligations
Probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities
Debts owed in either money or other assets or via services
Examples: wages payable, mortgage notes payable, warranties payable
Information which has been verified is considered more reliable, and therefore more valuable than unverified information. Accounting information is a basic social need. Accounting tools are developed to fill those human information needs and accounting