Financial statements are reports that summarize financial data over a period of time

Balance sheet: reports a business's assets, liabilities, and capital on a specific date

Liabilities are claims against assets or debt owed to others. Examples: accounts payable, loans payable

Capital: the amount an organization or individual is worth

accounting equation:

Assets = Liabilities + Capital

Merchandise inventory (or inventory) is a current asset with a normal debit balance, meaning a debit will increase and a credit will decrease.