Unit 3: Three-Statement Storyboard

Accounting Equation

The fundamental relationship Assets = Liabilities + Equity that must always balance in double-entry bookkeeping.

Assets

Resources owned by a business that have future economic value, such as cash, equipment, or inventory.

Liabilities

Amounts a business owes to outside parties, such as loans, accounts payable, or unpaid taxes.

Owner's Equity

The owner's residual claim on business assets after all liabilities are paid; also called net worth or capital.

Journal Entry

A record of a business transaction showing which accounts are debited and credited and by what amounts.

Trial Balance

A report listing all ledger account balances to verify that total debits equal total credits.

Revenue

Money earned from selling goods or services before any expenses are subtracted.

Expenses

Costs incurred in the process of earning revenue, such as rent, wages, or supplies.

Conditional Formatting

An Excel feature that automatically changes cell appearance based on rules, such as highlighting values above a threshold.

XLOOKUP

An Excel function that searches a range for a value and returns a corresponding result from another range, replacing VLOOKUP.

Closing Entries

Journal entries that transfer temporary account balances (revenue, expenses, dividends) to retained earnings, resetting them to zero for the next period.

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in the United States.

Named Ranges

A descriptive name assigned to a cell or range of cells in Excel, making formulas easier to read and maintain.

SWITCH Function

An Excel function that compares a value against a list of possible results and returns the corresponding match.

Net Income

The profit remaining after all expenses are subtracted from revenue; also called the bottom line.

Retained Earnings

The cumulative net income kept in the business after dividends are paid; links the income statement to the balance sheet.

Income Statement

A financial statement showing revenue, expenses, and net income over a specific period; also called the profit and loss statement.

Balance Sheet

A financial statement showing a company's assets, liabilities, and equity at a specific point in time.

Cash Flow Statement

A financial statement showing how cash moved in and out of a business during a period, organized by operating, investing, and financing activities.

Operating Activities

The section of the cash flow statement that reports cash generated or used by core business operations.

Investing Activities

The section of the cash flow statement that reports cash used for or received from buying and selling long-term assets.

Financing Activities

The section of the cash flow statement that reports cash from or paid to investors and creditors, such as issuing stock or repaying loans.

Current Ratio

A liquidity measure calculated as Current Assets ÷ Current Liabilities; a ratio above 1 means the business can cover short-term debts.

Return on Assets (ROA)

A profitability measure calculated as Net Income ÷ Total Assets; shows how efficiently a company uses its assets to generate profit.

INDEX/MATCH

A powerful Excel lookup combination where MATCH finds a position and INDEX returns the value at that position in another range.

KPI Dashboard

A visual display of key performance indicators such as ratios, trends, and targets, often built with Excel charts and conditional formatting.

Revenue Recognition

The accounting principle that revenue is recorded when it is earned and realizable, not necessarily when cash is received.

Matching Principle

The accounting rule that expenses should be recorded in the same period as the revenues they helped generate.

Cash Flow

The movement of money in and out of a business; positive cash flow means more money coming in than going out.

Working Capital

The difference between current assets and current liabilities; measures a company's short-term financial health.

Excel Table

A structured range of data in Excel with named columns, auto-expanding formulas, and built-in formatting.

Accounting Period

A defined span of time for which financial records are kept and reports are prepared, such as a month, quarter, or year.