Accounting Ch. 1

Question 1

process of planning, recording, analyzing and interpreting financial information

Answer 1

accounting

Question 2

planned process designed to compile financial data and summarize the results in accounting records and reports

Answer 2

accounting system

Question 3

financial reports that summarize the financial condition and operations of a business

Answer 3

financial statement

Question 4

a formal report that shows what an individual owns, what an individual owes, and the difference between

Answer 4

net worth statement

Question 5

anything of value that is owned

Answer 5

asset

Question 6

the difference between personal assets and

personal liabilities

Answer 6

personal net worth

Question 7

defined as the difference between assets and liabilities

Answer 7

equity

Question 8

the principals of right and wrong that guide an individual in making decisions

Answer 8

ethics

Question 9

the use of ethics in making business decisions

Answer 9

business ethnics

Question 10

an amount owed

Answer 10

liability

Question 11

a business that preforms an activity for a fee

Answer 11

service business

Question 12

a business owed by one person

Answer 12

proprietorship

Question 13

a formal written document that describes the nature of a business and how it will operate

Answer 13

business plans

Question 14

an amount paid for the use of money for a period of time

Answer 14

interest

Question 15

interest paid on an original amount deposited in a bank plus any interest that has been paid

Answer 15

compound interest

Question 16

generally accepted accounting principals the standers and rules that accountants follow while recording and reporting financial activities

Answer 16

GAAP

Question 17

financial rights to the assets of a business

Answer 17

equities

Question 18

the amount remaining after the value of the liabilities is subtracted from the value of all assets

Answer 18

owner’s equity

Question 19

an equation showing the relationship among assets, liabilities, and owners equity

Answer 19

accounting equation

Question 20

any business activity that changes assets, liabilities, or owners equity

Answer 20

transaction

Question 21

a record that summarizes all the transactions pertaining to a single item in the accounting equation

Answer 21

account

Question 22

the name given to an account

Answer 22

account title

Question 23

the difference between the increases and decreases in an account

Answer 23

account balance

Question 24

an account used to summarize the owners equity in a business

Answer 24

capital amount

Question 25

a person or business to whom a liability is owned

Answer 25

creditor

Question 26

An increase in equity resulting from the sale of goods or services

Answer 26

revenue

Question 27

A sale for which payment will be received at a later date

Answer 27

sale on account

Question 28

cost of goods or services used to operate a business

Answer 28

expense

Question 29

assets taken from the business

Answer 29

withdrawals