| Account | A standardized format that organizations use to accumulate the dollar effects of transactions on each financial statement item.
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| Assets | Probable future economic benefits owned by the entity as a result of past transactions.
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| Continuity (Going-Concern) Assumption | States that businesses are assumed to continue to operate into the foreseeable future.
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| Contributed Capital | Results from owners providing cash (and sometimes other assets) to business.
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| Credit | The right side of an account.
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| Current Assets | Assets that will be used or turned into cash within one year. Inventory is always considered a current asset regardless of the time needed to produce and sell it.
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| Current Liabilities | Short-term obligations that will be paid in cash (or other current assets) within the current operating cycle or one year, whichever is longer.
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| Debit | The left side of an account.
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| Historical Cost Principle | Requires assets to be recorded at the historical cash-equivalent cost, which on the date of the transaction is cash paid plus the current dollar value of all noncash considerations also given in the exchange.
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| Journal Entry | An accounting method for expressing the effects of a transaction on accounts in a debitsequal- credits format.
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| Liabilities | Probable debts or obligations of the entity that result from past transactions, which will be paid with assets or services.
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| Primary Objective of External Financial Reporting | Provides useful economic information about a business to help external parties make sound financial decisions.
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| Retained Earnings | Cumulative earnings of a company that are not distributed to the owners and are reinvested in the business.
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| Separate-Entity Assumption | States that business transactions are separate from the transactions of the owners.
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| Stockholders' Equity (Owners' Equity or Shareholders' Equity) | The financing provided by the owners and the operations of the business.
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| T-account | A tool for summarizing transaction effects for each account, determining balances, and drawing inferences about a company's activities.
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| Transaction | (1) An exchange between a business and one or more external parties to a business or (2) a measurable internal event such as the use of assets in operations.
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| Transaction Analysis | The process of studying a transaction to determine its economic effect on the business in terms of the accounting equation.
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| Unit-of-Measure Assumption | States that accounting information should be measured and reported in the national monetary unit.
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