Key Terms
- Sole Proprietorship: A Sole Proprietorship is an unincorporated (not registered) business owned by one person.
- Income Statement: An income statement is a financial statement that summarizes the profitability of a business entity for a specified period.
- Financial Statement: Accounting reports that provide information on the various transactions involved in the business are called financial statements.
- Revenue: Revenue is the source of increase in the business assets from its profit-directed activities.
- Expense: Expenses are the source of decrease in business assets from its profit-directed activities.
- Net Income: Net Income is the excess of revenue over expenses for a specified period.
- Net Loss: Net Loss is the excess of expenses over revenue for a specified period.
- Balance Sheet: A balance sheet is a financial statement showing the financial position of an enterprise by summarizing its assets, liabilities, and owner’s equity at a given point in time.
- Customers: The customer is the entity involved in a business transaction with a business.
- Creditors: The creditors invest resources in the business by extending credit to them, including loans or goods purchased on credit.