Accounting Ch. 1 Flashcards
process of planning, recording, analyzing and interpreting financial information
accounting
planned process designed to compile financial data and summarize the results in accounting records and reports
accounting system
financial reports that summarize the financial condition and operations of a business
financial statement
a formal report that shows what an individual owns, what an individual owes, and the difference between
net worth statement
anything of value that is owned
asset
the difference between personal assets and
personal liabilities
personal net worth
defined as the difference between assets and liabilities
equity
the principals of right and wrong that guide an individual in making decisions
ethics
the use of ethics in making business decisions
business ethnics
an amount owed
liability
a business that preforms an activity for a fee
service business
a business owed by one person
proprietorship
a formal written document that describes the nature of a business and how it will operate
business plans
an amount paid for the use of money for a period of time
interest
interest paid on an original amount deposited in a bank plus any interest that has been paid
compound interest
generally accepted accounting principals the standers and rules that accountants follow while recording and reporting financial activities
GAAP
financial rights to the assets of a business
equities
the amount remaining after the value of the liabilities is subtracted from the value of all assets
owner’s equity
an equation showing the relationship among assets, liabilities, and owners equity
accounting equation
any business activity that changes assets, liabilities, or owners equity
transaction
a record that summarizes all the transactions pertaining to a single item in the accounting equation
account
the name given to an account
account title
the difference between the increases and decreases in an account
account balance
an account used to summarize the owners equity in a business
capital amount
a person or business to whom a liability is owned
creditor
An increase in equity resulting from the sale of goods or services
revenue
A sale for which payment will be received at a later date
sale on account
cost of goods or services used to operate a business
expense
assets taken from the business
withdrawals
