accounting chat 1 Flashcards
Accounting
is the process of planning, recording, analyzing, and interpting financial info
Accounting system
is a planned process designed
Financial statement
reports that summarize the financial conditions and operations of a business are called financial statements
Net worth statement
ALLOWS THE PERSON EXTENDING THE LOAN TO SEE FINACIAL POSITION of a borrower on a specific date and make a lending decisions.
Asset
anything of value that is owned
Liability
an amount owed
Personal net worth
the difference between personal assets and personal liabilities
Equity
the difference between assets and liabilities
Ethics
the principles of right and wrong that guide an individual in making decisions
Business ethics
the use of ethics in making business decisions
Service business
a business that preforms an activity for a fee
Proprietorship
a business owned by one person
Business plan
a formal written document that describes the nature of a business and how it will operate.
GAAP
the standards and rules that accountants follow while recording and reporting financial activities
Equities
financial rights to the asset of a business
Owners equity
the amount remaining after the values of all liabilities is subtracted from the value of all assets
Accounting equation
the equation showing relationship among assets, liabilities, and owners equity
Assets= liabilities + owners equity
Assets= liabilities + owners equity
Left side amount – right side amount
Left side amount – right side amount
Accounts call any business activity that changes assets, liabilities, or owners equity a transaction
A record that summarizes all the transaction pertaining to a single item in the accounting equation is called an account
Accounts call any business activity that changes assets, liabilities, or owners equity a transaction
A record that summarizes all the transaction pertaining to a single item in the accounting equation is called an account
The name given to an account is called an account title
The difference between the increases and decreases in an account is called an account balance
An account used to summarized the owners equity in a business is called a capital account
The name given to an account is called an account title
The difference between the increases and decreases in an account is called an account balance
An account used to summarized the owners equity in a business is called a capital account
A person or business to whom a liability is owed is called a creditor.
An increase in equity resulting from the sale of good or services is called revenue
A sale for which payment will be received at a later date is called sale on account
Unlike a liability, which is an amount that is owed, the cost of goods or service used to operate a business is called expense
Assets taken from the business from the owners personal use are called withdrawals
A person or business to whom a liability is owed is called a creditor.
An increase in equity resulting from the sale of good or services is called revenue
A sale for which payment will be received at a later date is called sale on account
Unlike a liability, which is an amount that is owed, the cost of goods or service used to operate a business is called expense
Assets taken from the business from the owners personal use are called withdrawals
