accounting 1 test chapter 1 Flashcards
accounting system
designed to compile financial date
equities
financial rights to the assets of a business
account
a record that summarizes all the transaction pertaining
account balance
the difference between the increases and decreases
accounting
planning, recording, analyzing
asset
value that is owned
capital account
summarize the owners equity in a business
equity
difference between assets and liabilities
ethics
principles of right and wrong
financial statements
financial reports that summarize the financial condition
GAAP
Generally Accepted Accounting Principles
liability
amount owed
net worth statement
formal report that shows what an individual owns
owners equity
amount remaining after the value of all liabilities is subtracted
personal net worth
difference between personal assets and personal liabilities
sale on account
a sale for which payment will be received at a later date
service business
performs an activity for a fee
transaction
any business activity that changes, asset, liabilities, or owners equity
withdrawals
assets taken from the business for the owners personal use
accounting equation
the equation showing the relationship among assets, liabilities, and owners equity
business ethics
ethics in making business decisions
business plan
a formal written document
creditor
to whom a liability
expense
the cost of goods used to operate a business
proprietorship
owned by one person
revenue
an increase in equity resulting from the sale of goods or services
account title
the name given to an account
