Accounting and Payroll Concepts

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Generally Accepted Accounting Principles (GAAP)

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Standards and rules used to prepare financial statements.

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Merchandising Corporation

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A business that buys and sells goods for profit.

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Sole Proprietor Service Business

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A single-owner business providing services rather than goods.

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Accounting Cycle

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The process of recording and summarizing financial transactions over a period.

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Business Transactions

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Economic events that affect a company’s financial position.

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Debit

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An entry on the left side of an account, increasing assets or decreasing liabilities/equity.

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Credit

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An entry on the right side of an account, increasing liabilities/equity or decreasing assets.

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General Journal

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A chronological record of all transactions.

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Ledger

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A collection of accounts showing changes from transactions.

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Trial Balance

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A list of all accounts and their balances to verify debits equal credits.