24 ACCOUNTING BASICS THAT EVERYBODY NEEDS TO KNOW 1. ASSETS Resources owned by a business that have economic value. 2. LIABILITIES Obligations or debts owed by a business. 3. EQUITY The owner’s interest in the business. 4. REVENUE Income earned from normal business operations. 5. EXPENSES Costs incurred in the process of earning revenue. 6. PROFIT Financial gain after deducting expenses from revenue. 7. LOSS Occurs when expenses exceed revenue. 8. CASH FLOW The movement of money in and out of a business. 9. GROSS MARGIN Revenue minus the cost of goods sold. 10. NET INCOME Total revenue minus total expenses. 11. BALANCE SHEET Financial statement showing assets, liabilities, and equity. 12. INCOME STATEMENT Financial statement showing revenue, expenses, and profit over time. 13. CASHFLOW STATEMENTS Financial statement showing cash inflows and outflows. 14. DEBITS AND CREDITS Entries used to record transactions in double-entry accounting. 15. JOURNAL ENTRIES Records of…