BMGT 220 Chapter Notes - Chapter 2: Accounts Payable, Balance Sheet, Accounting Equation

• School: University of Maryland
• Department: Business and Management
• Course: BMGT 220
• Professor: Dr.Progyan Basu

Document Summary

Account: the record that records the increases and decreases in each accounting equation element. T account: form of the account because it resembles the letter t. left side is the debit and the right side is the credit. Debit: the left side of the account, which shows increases in assets. Credits: the right side of the account, which shows decreases in assets. Balance of the account: the excess of debits of an asset account over its credits. Ledger: a group of accounts for a business entity. Chart of accounts: a list of the accounts in the ledger. Can be physical (cash and supplies) or intangibles (patent rights, copyrights, trademarks) includes accounts receivable, prepaid expenses, building, land, and equipment. Liabilities: debts owed to outsiders (creditors) often identifies on the balance sheet by titles that include payable. Examples include accounts payable, notes payable, wages payable. Cash received before services are delivered creates a liability to perform the services.