Accounting vocab Flashcards
Account
A record that summarized all the transactions pertaining to a single item in the accounting equation
Account balance
The difference between the increases and decreases in an account
Account title
The name given to an account
Accounting
The process of planning, recording, analyzing, and interpreting financial information
Accounting equation
An equation showing the relationship among assets, liabilities, and owner’s equity
Accounting system
A planned process designed to compile financial date and summarize the results in accounting records and reports
Asset
Anything of value that is owned
Business ethics
The use of ethics in making business decisions
Business plan
A formal written document that describes the nature of a business and how it will operate
Capital account
an account used to summarize the owner’s equity in a business
Creditor
A person or business to whom a liability is owed
equities
Financial rights to the assets of a business
equity
The difference between assets and liabilities
ethics
the principles of right and wrong that guide an individual in making decisions
Expense
the cost of goods or services used to operate a business
Financial statements
Financial reports that summarize the financial condition and operations of a business
GAAP
Generally accepted accounting principles. The standards and rules that accountants follow while recording and reporting financial activities.
Liability
An amount owed
Net worth statement
A formal report that shows what an individual owns, what an individual owes, and the difference between the two
Owner’s equity
The amount remaining after the value of all liabilities is subtracted from the value of all assets
Proprietorship
A business owned by one person
Personal net worth
the difference between personal assets and personal liabilities
revenue
an increase in equity resulting from the sale of goods or services
sale on account
a sale for which payment will be received at a later date
service business
a business that performs an activity for a fee
withdrawals
assets taken from the business for the owners personal use
transaction
any business activity that changes assets, liabilities, or owner’s equity
