accounting vocab ch1 Flashcards
A planned process designed to compile financial data and summarize the results in accounting records and reports
accounting system
the process of planning, recording, and analyzing, and interpreting financial information
accounting
Financial reports that summarize the financial condition and operations of a business.
financial statements
A formal report that shows what an individual owns, what an individual owes, and the difference between the two
net worth statement
Anything of value that is owned.
asset
An amount owed
liability
The difference between personal assets and personal liabilities
personal net worth
The difference between assets and liabilities
equity
The principles of right and wrong that guide an individual in making decisions
ethics
The use of ethics in making business decisions.
business ethics
A business that performs an activity for a fee
service business
A business owned by one person
proprietorship
A formal written document that describes the nature of a business and how it will operate.
business plan
Generally Accepted Accounting Principles. The standards and rules that accountants follow while recording and reporting financial activities
GAAP
Financial rights to the assets of a business
equities
The amount remaining after the value of all liabilities is subtracted from the value of all assets
owner’s equity
The equation showing the relationship among assets, liabilities, and owner’s equity
accounting equation
Any business activity that changes assets, liabilities, or owner’s equity.
transaction
A record that summarizes all the transactions pertaining to a single item in the accounting equation.
account
The name given to an account
account title
The difference between the increases and decreases in an account
account balance
An account used to summarize the owner’s equity in a business.
capital account
A person or business to whom a liability is owed.
creditor
An increase in equity resulting from the sale of goods or services.
revenue
A sale for which payment will be received at a later date.
sale on account
The cost of goods or services used to operate a business.
expense
Assets taken from the business for the owner’s personal use
withdrawals
