Accounting Lesson 1 Vocab

Question 1

accounting

Answer 1

planning, recording, analyzing, and interpreting financial information

Question 2

accounting system

Answer 2

a planned process for providing financial information that will be useful to management

Question 3

accounting records

Answer 3

organized summaries of a business’s financial activities

Question 4

financial statements

Answer 4

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

Question 5

service business

Answer 5

a business that performs an activity for a fee

Question 6

proprietorship

Answer 6

a business owned by one person

Question 7

asset

Answer 7

anything of value that is owned

Question 8

equities

Answer 8

financial rights to the assets of a business

Question 9

liability

Answer 9

an amount owed by a business

Question 10

owner’s equity

Answer 10

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

Question 11

accounting equation

Answer 11

an equation showing the relationship among assets, liabilities, and owner’s equity

Question 12

ethics

Answer 12

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

Question 13

business ethics

Answer 13

the use of ethics in making business decsions

Question 14

transaction

Answer 14

a business activity that changes assets, liabilities, or owner’s equity

Question 15

account

Answer 15

a record summarizing all the information pertaining to a single item in the accounting equation

Question 16

account title

Answer 16

the name given to an account

Question 17

account balance

Answer 17

the amount in an account

Question 18

capital

Answer 18

the account used to summarize the owner’s equity in a business

Question 19

revenue

Answer 19

an increase in owner’s equity resulting from the operation of a business

Question 20

sale on account

Answer 20

a sale for which cash will be received at a latter date

Question 21

expense

Answer 21

a decrease in owner’s equity resulting from the operation of a business

Question 22

withdrawals

Answer 22

assets taken out of a business for the owner’s personal use

Question 23

What are the four types of businesses? Explain them.

Answer 23

1. Proprietorship- owned by 1 person
2. partnership- 2 or more
3. Corporation- owned by shareholders
4. Franchise- owned by many people, but one main person runs the company

Question 24

Give 3 examples of service business

Answer 24

restaurant, doctor, landscaper

Question 25

What is the accounting equation?

Answer 25

A= L + OE
Assets= liabilities + owner’s equity

Question 26

Received cash from owner as an investment

Answer 26

A- cash +
OE- capital +

Question 27

Paid cash for supplies

Answer 27

A- cash -
A- supplies +

Question 28

Paid cash for insurance

Answer 28

A- cash -
A- (prepaid insurance) +

Question 29

Bought supplies on account

Answer 29

A- supplies +
L- accts. payable +

Question 30

Paid cash on account

Answer 30

A- cash -
L- accts. payable -

Question 31

Name all assets

Answer 31

Cash, supplies, prepaids, accounts receivable

Question 32

Name liabilities

Answer 32

Accounts payable

Question 33

Received cash from sales

Answer 33

A- cash +
OE- capital +

Question 34

Sold services on account

Answer 34

A- accts. receivable +
OE- Capital +

Question 35

Received cash on account

Answer 35

A- Cash +
A- accounts receivable -

Question 36

Paid cash for rent

Answer 36

A- cash -
OE- capital -

Question 37

Paid cash to owner for personal use

Answer 37

Withdrawal
A- cash -
OE- capital -

Question 38

What are the three types of transactions?

Answer 38

Expense, Revenue, Withdrawal

Question 39

What goes into accounts receivable?

Answer 39

assets, sell to a customer on account, sell services on account, receive cash on account

Question 40

What goes into accounts payable?

Answer 40

liabilities, company we buy/pay on account, bought supplies on account, paid cash on account