Accounting vocab

Question 1

Account

Answer 1

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

Question 2

Account balance

Answer 2

The difference between the increases and decreases in an account

Question 3

Account title

Answer 3

The name given to an account

Question 4

Accounting

Answer 4

The process of planning, recording, analyzing, and interpreting financial information

Question 5

Accounting equation

Answer 5

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

Question 5

Accounting system

Answer 5

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

Question 6

Asset

Answer 6

Anything of value that is owned

Question 7

Business ethics

Answer 7

The use of ethics in making business decisions

Question 8

Business plan

Answer 8

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

Question 8

Capital account

Answer 8

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

Question 9

Creditor

Answer 9

A person or business to whom a liability is owed

Question 10

equities

Answer 10

Financial rights to the assets of a business

Question 11

equity

Answer 11

The difference between assets and liabilities

Question 12

ethics

Answer 12

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

Question 13

Expense

Answer 13

the cost of goods or services used to operate a business

Question 14

Financial statements

Answer 14

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

Question 15

GAAP

Answer 15

Generally accepted accounting principles. The standards and rules that accountants follow while recording and reporting financial activities.

Question 16

Liability

Answer 16

An amount owed

Question 17

Net worth statement

Answer 17

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

Question 17

Owner’s equity

Answer 17

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

Question 17

Proprietorship

Answer 17

A business owned by one person

Question 17

Personal net worth

Answer 17

the difference between personal assets and personal liabilities

Question 18

revenue

Answer 18

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

Question 19

sale on account

Answer 19

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

Question 19

service business

Answer 19

a business that performs an activity for a fee

Question 20

withdrawals

Answer 20

assets taken from the business for the owners personal use

Question 20

transaction

Answer 20

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