Allowance for Bad Debts - Amount of estimated debt to the business that is not expected to be repaid and is subtracted from accounts receivable on the balance sheet. Also known as an allowance for doubtful accounts.
Assets - Anything that a business owns that has monetary value.
Accounts Payable - Debts of the business, often to suppliers, and generally payable within 30 days.
Accounts Receivable - An amount owed to the business, usually by one of its customers, as result of the extension of credit.
Accrued Payroll Taxes - Taxes payable for employee services received, but for which payment has not yet been made.
Balance Sheet - A financial statement showing the assets, liabilities, and net worth of a business as of a specific date.
Current Assets - Cash and other assets readily converted into cash. Includes accounts receivable, inventory, and prepaid expenses.
Current Liabilities - The debts of a company which are due and payable within the next 12 months.
Current Ratio - Current assets divided by current liabilities.
Debt/Worth Ratio - Total Liabilities divided by Net Worth.
Depreciation - An accounting convention to take into account the physical deterioration of an asset. It is a systematic method to allocate the historical cost of the asset over its useful life.
Fixed Assets - Also called long-**term assets with a relatively long life that are used in the production of goods and services, rather than being for resale.
GAAP - Abbreviation of Generally Accepted Accounting Principles. Conventions, rules, and procedures that define accepted accounting practice.
Inventory - Goods held for sale, raw material and partially finished products which will be sold when they are finished.